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Key Insights
- TD Sequential issues a sell signal as Bitcoin price trades around $103.6K after a steep rally
- Estimated leverage ratio fell from 0.27 to 0.235 while price climbed 10% in 5 days
- Liquidation zones stack above $105K, creating possible resistance for upward moves
Bitcoin’s rally has pushed it over $103,000, but a TD Sequential indicator is signaling a sell signal on the 12-hour chart. Traders are cutting their leverage around important liquidation levels, which suggests that Bitcoin might consolidate before making further gains.
Sell Signal Appears on 12-Hour Chart
Bitcoin has gained a lot of momentum in the last week, increasing from around $96,000 to around $103,662 at the time of writing. The bulls have pushed for higher closes, which have resulted in large bullish candles that testify to their strength. On the other hand, the 12-hour chart now shows a warning alert.
As per Ali Martinez, the TD Sequential indicator has now given a sell signal at these levels. Usually, this warning sign appears following massive upswings and may suggest a brief market break.
Similar signals denoted by downward arrows on the chart in the last two instances, were generally followed by price corrections or holding back.
At this level, where the price remains above $103,000, this indicator can affect traders to take profits or exit their positions. If this scenario plays out, Bitcoin may come back to check in at $100,000 or $98,000, but the broader uptrend remains intact.
Leverage Drops as Bitcoin (BTC) Price Rallies
Moreover, according to CryptoQuant, overall leverage on exchanges has been lowered by traders. The Estimated Leverage Ratio dropped from 0.258 to 0.235 during May 5 to May 9, while Bitcoin increased in value from $96,000 to above $103,000.
This trend indicates that participants are reducing their leverage – reducing the level of exposure they have depending on their holdings.
Deleveraging is a common phenomenon during times when volatility is high or when prices hit important barriers such as the current resistance around $103,000 to $106,000.
Leverage reduction reduces the probability of significant liquidations and drastic price fluctuations. This prevents major rapid appreciations but also contributes to market stabilization.
Deleveraging during price increases indicates that the rally is driven by direct purchases rather than by the excessive use of leverage.
The convergence with the TD Sequential chart’s signal suggests that traders are probably looking out for resistance in the short term.
Liquidation Levels Cluster Above Bitcoin Price $105K
The convergence with the TD Sequential signal suggests traders are anticipating short-term resistance, and recent Alphractal data reinforces this. The 3-day and 1-month aggregated heatmaps show higher concentrations of long liquidations above the $105,000-$110,000 band.
These charts assist in determining the regions in which massive capital could be unwound if prices skyrocketed. The deep red and orange highlighted areas are possible areas for major liquidation events. If Bitcoin prices move into these ranges, market participants may see sudden swings as automated orders are tripped.
In addition, the shrinking green zones beneath the $100,000 level suggests that a decline in price is less likely to trigger widespread short liquidations. The different activity on both sides indicates that the long liquidations are currently presenting a greater risk.
Fractal Cycle Suggests October Peak
On the flip side, analysis using Alphractal’s Bitcoin Fractal Cycle chart suggests that the market is in the markup phase of its extended market cycle. Historically, similar patterns are repeated every four years, with bear markets, accumulation, and distribution phases.
According to the model, the next significant high would be between October 12 and 16, 2025, followed by a low in October 2026. This fractal in history suggests that Bitcoin typically hits its high a year after its halving, and this current cycle seems to follow this timeline.
Short-term sell signals, and liquidation risk may affect short-term moves, but in the longer term, there is more upside before a full cycle reversal. This situation explains why, despite the recent fluctuations in prices, large holders are still acquiring Bitcoin.
Disclaimer
In this article, the views, and opinions stated by the author, or any people named are for informational purposes only, and they don’t establish the investment, financial, or any other advice. Trading or investing in cryptocurrency assets comes with a risk of financial loss.
