Bitcoin May Top At $114K Before Altcoin Rotation Begins

Highlights:

• Bitcoin approaches $114K resistance, facing $5B in liquidation pressure between $110K and $115K.
• Binance records 2,190 BTC outflow worth $243M, signalling cautious trader sentiment near resistance.
• CME gap at $107,328 and fading short squeeze pressure suggest a potential short-term pullback.

Bitcoin was trading at $109,886 after touching a high of $111,800, getting closer to a major resistance area at $113,000 to $114,000. The level is also supported by a trendline from earlier market cycles, which indicates that the price could react strongly if it reaches this point.

The $113,550 level is currently acting as a barrier for prices rising further. A denial here could result in a brief downward correction, and various indicators on the blockchain support this view.

Bitcoin Nears $114K as Long-Term Trendline and Liquidation Zone Converge

At the same time, Alphractal’s liquidation heatmap for the last 6 months reveals that more than $5 billion in liquidation leverage is between $110,000 and $115,000. Now, both types of traders are using large leverage in this range, which may result in sudden liquidations.

Supporting this, the total notional value of long exposure is now approaching $150 billion. This suggests that many in the industry are in danger, and a drop could cause additional closures.

Also, the market could respond to a newly formed CME futures gap at $107,328, as seen on KuCoin’s chart. Because there is no trading in this area, prices often move to fill in, especially when the market is correcting.

If Bitcoin fails to break through $114K and reverses, it might target the gap at $107,328. During times of high volatility, CME gaps often act as strong technical magnets.

Short Squeeze Activity Fades While BTC Outflows Point to Trader Caution

There were many strong short squeeze events on Binance between April and early May, as the Binance Long vs. Short Squeeze Pressure chart shows.

As a result, the price rose sharply as short sellers had to close their positions as the market moved up.

But since mid-May, the pressure to cover short positions has decreased, indicating that short-side liquidations are no longer a main factor in current market movement. This could mean that the rally is starting to slow down, at least for now.

At the same time, data from exchanges reveals that Binance sent out 2,190 BTC on May 22, which is equivalent to $243.6 million.

Moving large amounts of BTC to private wallets often means users want to lower their risk or secure their profits. Netflow data kept showing losses through May 23, meaning users are still cautious as the price nears the resistance level.

Although exchange outflows can lessen short-term selling, they can also signal that traders are waiting for the market to drop.

Economic Weakness Add Pressure as Altcoin Rotation Looms

Apart from technical and blockchain signals, the overall economy is showing more signs of uncertainty. According to Alphractal’s chart, the Kansas City Fed Labour Market Conditions Index indicates that the U.S. labour market is still weak.

The index, which measures 24 important factors like unemployment, job openings and wage growth, has fallen further into the red. A reading that is less than zero indicates the labour market is not meeting its usual standards and may cause economic worries.

As the decline continues, it reinforces warnings that a slowdown or recession could happen, as the labour market is essential to the overall health of the economy. If working conditions become more difficult, institutional and retail investors often buy less crypto.

Most market participants change their exposure when the economy shifts, especially when those shifts align with technical resistance zones.

If Bitcoin does not rise above $114K, traders could turn their attention to altcoins, which is a common pattern from the past. After every major Bitcoin break, investors have turned to altcoins, and the same conditions are appearing now.

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.