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Bitcoin Price Action: Technical Analysis and Bullish Divergence Indicators

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Bitcoin Price Action: Technical Analysis and Bullish Divergence Indicators

Bitcoin Price Recovery Prospects: Key Levels and Bullish Signals for BTC

Bitcoin Price– Bitcoin’s (BTC) price has experienced significant corrections at the start of each month during Q3 2024. The first seven days of July and August saw notable drawdowns of 12.56% and 15.94%, respectively. September is showing a similar trend, yet Bitcoin has demonstrated a swift recovery, forming lower highs (LH) in the weeks following these corrections.

Bitcoin Open Interest (OI) Sees 12% Drop: What It Means for Traders

Bitcoin open interest (OI) has declined by 12%, from $34.7 billion to $30 billion, over the past week. This drop is seen as a positive development under current market conditions. Rising OI during sideways price movement post-flash crash typically signals an increase in short positions. Multiple days of negative funding rates since August 5th have confirmed a bearish sentiment.

Bitcoin Price Action: Technical Analysis and Bullish Divergence Indicators

The decrease in OI suggests that short-leverage traders might be exiting the market until a clearer opportunity emerges. Additionally, liquidations have significantly dropped since August, with Bitcoin’s crash to $49,000 causing $1 billion in liquidations. Following this, liquidations have remained around $150-$200 million, with an exception of $300+ million on August 27, marking the second-largest liquidation event of the month.

Potential for Bitcoin Rebound: Key Levels and Liquidation Insights

Bitcoin’s recent decline below $56,000 has hit several liquidation clusters, similar to those observed in early August. The latest drop has cleared a substantial amount of liquidation leverage positions exceeding $455 million. Liquidations represent permanent losses, while liquidation leverage reflects the value of positions. For instance, $1 million in liquidations could equate to $10 million in positional value.

Bitcoin Price Action: Technical Analysis and Bullish Divergence Indicators

With downside liquidity now diminished until $49,000, the next concentrated liquidation positions are around $61,000, representing over $500 billion. This situation suggests that a short-term rebound is increasingly likely.

Technical Analysis: Bullish Divergence and Support Levels

Bitcoin Price Action: Technical Analysis and Bullish Divergence Indicators

From a technical perspective, Bitcoin’s price action has shown weak strength post-correction. However, several bullish signals indicate a potential recovery. A liquidity sweep at $55,700 has been tested since August 15. If Bitcoin does not recover immediately, the next major support area is between $54,500 and $55,500.

Bitcoin Price Action: Technical Analysis and Bullish Divergence Indicators

Additionally, a bullish divergence between Bitcoin’s price and the Relative Strength Index (RSI) has been noted. While BTC has recorded lower lows, RSI shows lower highs, hinting at a possible reversal.

Bitcoin Price Action: Technical Analysis and Bullish Divergence Indicators

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