On January 7, Bitcoin faced a 4% decline, with market dynamics drawing attention to significant traders influencing price movements.
Liquidity Games and Market Shifts
BTC/USD fell below the $98,000 mark, as shown by data from TradingView. The drop coincided with the release of the US Job Openings and Labor Turnover Survey (JOLTS), which highlighted an increase in hiring activity, signaling strength in the labor market.
“JOLTS rising without a simultaneous rise in initial jobless claims points to one thing — job creation,” commented Matt Cowart, a trader and YouTube host, in a post on X. “I’m happy to see the market drop today; it sets up nicely for long positions tomorrow.”
The retracement erased gains from the previous day, leaving Bitcoin vulnerable as liquidity support evaporated. Keith Alan, co-founder of Material Indicators, described the phenomenon as “spoofing,” where large traders manipulate liquidity to influence short-term price action.
“Spoofs can be frustrating, but they often create predictable Bitcoin price patterns,” Alan noted, sharing a Binance BTC/USDT chart that showed the removal of key liquidity blocks.
Longs Liquidated as Price Tests Support
The retracement also caused significant losses for leveraged traders. Monitoring site CoinGlass revealed that over $30 million worth of long positions were liquidated within an hour.
“Bitcoin is in the middle of a retest, and it could be a volatile one,” analyst Rekt Capital commented, emphasizing the importance of a daily close above $101,165 to confirm a successful support test.
Bearish Predictions Resurface
The latest pullback revived bearish forecasts, even as Bitcoin held above $100,000. Previously, traders speculated that invalidating a head-and-shoulders pattern on the daily chart could maintain bullish momentum.
However, with the retracement, popular analyst Cheds Trading expressed doubts, noting that Bitcoin was revisiting a key invalidation zone. “This price action is completely normal,” Cheds wrote, adding further analysis in subsequent comments.
Scott Melker, known as the “Wolf of All Streets,” pointed to the 50-day simple moving average (SMA) as a crucial support level for Bitcoin.
Justin Bennett, another trader, cautioned that losing this support could trigger a deeper drop. “If $BTC breaks below this level, we’re likely heading toward those $92K lows,” he warned in his market analysis.
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