Rome wasn’t built overnight. Neither is a 100k BTC.
Significant support for BTC has been building on the orderbooks on FTX since mid-December ‘21. As the US market’s opened yesterday, Monday January 10th, that position was filled, nearly 100%. Fat and happy, with a belly full of 1000’s of BTC-PERP contracts worth hundred’s of millions USD. Is the market ready to rally?
Before we can answer this, it’s important to note that FTX — the third largest exchange by daily transaction volume — and the exchange where the action we’re reviewing occurred, was built for primarily for automated trading bots. But not exclusively.
Watching the order books on TradingLite.com makes it’s clear bots are in play. On higher level time-frames one can visually identify bot orderbook fill patterns, as they precisely track the broader price action throughout the day, in updating the orderbooks in real-time, 24x7 days a week. As the price rises or falls, bots update their orders to track it along the way.
Many “orders” are but gambits, attempts to fool other market participants into believing there is interest in the books at certain levels. Only to disappear as price approaches. It’s like magic. If only we as humans had the capacity to make decisions so consistently, and at such speeds!
Experience tells me that when the walls are built thick, on solid foundations like the one we’re looking at here at around 40k, and remain static, unmoved, for long period’s of time, it’s evidence that human’s have made the decisions, not bots. It has intention.
It might be an institution, a whale, whoever. Doesn’t matter. Someone wants their order filled. Getting requires effort, liquidity in the market, and ultimately, volatility. It’s up to the market maker’s to ensure the job is done. and their orders get filled.
Love it or hate it, as painful experience as this process can be on the average retail trader, significant support and resistance levels are being formed, which is absolutely critical for future moves to the upside. In this case, the wall was built by the trader on FTX, using BTC-PERP perpetual futures derivative instruments. And consisted of 1000’s of BTC-PERP contracts, traded right at the level where retail market’s most feared as indicators of bearish continuation.
Orderbook walls are being built and torn down on all exchanges, at all times. Where they are built, how thick, and what type really depends on more factors than we can get into here today. Two key factors of interest for me now are: exchange liquidity, move visibility. If the trader’s didn’t want to be seen, they wouldn’t be. They need help from others to build the momentum required to rock the boat, as we say, and this is as about as clear a signal as one can give of interest.
Someone knew about Monday’s moves. Perhaps even, they created it.
While many highly margined traders looking for further gains to the upside will certainly be quite disappointed by downwards price movement, given they are likely to be liquidated or hit their stop-losses along the way. This is the exact scenario “smart money” needs. For them to fill their buy orders, you have to sell, whether you want to or not. Liquidated? So long buddy, but thanks for all the fish!
As uncomfortable as is, there might yet be a USDC lining in the clouds. Love it or hate it, a signal has been sent to the world.
“There IS SUPPORT BTC at 40k.”
The entire history of BTC price valuation is riddled with old, crumbling bullet holes and crumbling walls. Facades. Walls made of paper, meant to be burned. Meant to trick. From afar, it’s a challenge to deduce what type of wall is present, what the intention is, until price approaches. In the case of our supportwall@40k, our question was clearly answered at the opening of yesterday’s market sessions, at least for the short-term.
Monday’s flash micro-crash filled those outstanding BTC-PERP orders within a single 1 hour candle. Thousands of BTC, $100’s of million USD traded hands, just like that. Perfectly set-up. Patiently executed. A job well done. Time to move back up!
Or is it? What’s next? We will have to wait and see. If we continue to hold 40k levels, with such interest so cleared vested, I predict we will see a relief rally back to the lower Bull Market resistance levels and VPVR point of control at ~47k. We will need to keep an eye out for these same players taking profits later though, as eventually, they will almost certainly dump the assets at a later date. Traders don’t actually care about BTC. They only want your money.
If we fail to hold 39–40k, clearly, we’re heading down. The supporting yellow bricks of BTC will crumble and crash upon our backsides. Likely, carrying us down for a potential retest of levels as low as 30k, where volume dominance reigns and previous consolidation occurred throughout the 2021 ‘sideways’ market.
Many feel this scenario is requisite for a future move toward new ATH’s and 100k+ valuations, in fact. Personally, I don’t. I’m cautiously optimistic, 40k is our current level of support, and expect to hold that opinion until the data shows me otherwise. Let’s take it candle by candle, and see how things develop.
Summary
BTC is consolidating after reaching new ATH’s in November, looking for price support levels before it’s next big move. 40k — 47k range has thus far been lightly traded. Strong support levels are forming at 40k. Potentially representing the bottom of the local bear trend. That’s a good thing, even if it hurts. Trade carefully though, as it also might be a trap. Watch for a break above 47k with confirmation as support. Break below 40k and confirmation as resistence, and expect a retest of levels as far down as 30k before we can break free from the grip of the current bearish trend and continue towards 100k.
Be calm. Study. Find your levels. Set your buy-limits, stop losses, and take-profit limits. Observe. Don’t react. Win. Clap, like, +1, subscribe and follow for more!
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