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Over the last week, Bitcoin experienced one other wave of correction, with prices falling to around $88,000 because the crypto market continues to face weak investor appetite. While the leading cryptocurrency has seen some relief, an approaching monthly close suggests the market is at a critical point that would determine its price direction for February.
The Bitcoin market is considering a rebalancing or an entire collapse
According to veteran analyst KillaXBT, Bitcoin is heading for an important monthly close next week as recent price movements suggest the market is nearing a turning point. Notably, after hitting external highs near $94,600 earlier within the month, BTC has since faced determined rejection, pushing the worth back towards the underside of its recent range between $88,000 and $90,000.
Rejection of those highs resulted in pronounced upper wicks on higher time frames, a structure that usually indicates aggressive selling pressure. However, KillaXBT explains that such wicks are sometimes partially or fully traceable for liquidity reasons. With a full week of trading remaining until the tip of the monthly candle, the market analyst believes there are three primary scenarios that would determine the worth direction for February.
Source: @KillaXBT on X
First, Bitcoin could rise by the tip of the month, which might allow for a stronger end to the month. In this scenario, February could begin with price forming the upper part of the present wick, potentially reaching the low-to-mid $90,000s again before breaking over towards the $83,800 region later within the month.
In the second scenario, Bitcoin closes the month near current levels of around $89,000, followed by an early February liquidity hunt within the $91,000-$92,000 range before resuming the downtrend. Interestingly, each scenarios are consistent with the concept the market could initially move higher to rebalance liquidity before moving lower.
The third scenario represents a more severe end result consistent with a possible market collapse. In this case, KillaXBT predicts that Bitcoin could fall below the weekly and monthly opening price of $87,664 and shut below this level before February. The analyst describes this scenario as “fiercely bearish” because it increases the likelihood of a fast move towards lower support in the brand new month.
It is noteworthy that KillaXBT favors the primary two scenarios, as the present highly bearish sentiment suggests that almost all investors are least more likely to expect a move higher. However, the analyst also emphasizes that the lack of the $83,800 support level in any scenario would significantly change the outlook for any remaining long exposure.
Bitcoin price overview
At press time, Bitcoin is trading at $89,645, having risen barely by 1.4% over the past day.
BTC is trading at $89,627 on the each day chart | Source: BTCUSDT chart on Tradingview.com
Featured image from Flickr, chart from Tradingview
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