Bitcoin's Liquidity Assessment: Will $87K Influence BTC's Next Major Move?

The cryptocurrency market is experiencing heightened tension; however, a deep dive into Bitcoin’s chart reveals a more strategic picture than what the headlines imply.

Key Takeaways

Bitcoin's current price movement is closely linked to the liquidity areas around $89K and $87K, which are critical for potential reversals.
A loss of support in these zones could pull BTC lower, while maintaining structure could lead to a bullish breakout.
The impact of external macroeconomic factors, such as Federal Reserve policies, continues to influence Bitcoin's price trajectory, highlighting an intersection of technical and fundamental analysis.
A notable decrease in selling pressure and the possibility of renewed risk sentiment may contribute to a future price rally for Bitcoin.

Bitcoin’s liquidity test: Will 87K decide BTC’s next major move?

Recent price actions show BTC has retraced after its inability to surpass the $94.5K resistance level. The 3-day heatmap indicates a significant build-up of long liquidity between $89K and $87K, where dense liquidity clusters frequently act as magnets, particularly when traders are searching for over-leveraged positions. This current pullback aligns with that trend, as Bitcoin prices gravitate toward unexplored liquidity pools, which are key in dictating the next directional movement.

Will Bitcoin Drop to Sweeping Levels of $89K to $87K?

The downward movement towards $90K aligns with liquidity that formed earlier in the week, and a more substantial liquidity cluster resides between $87K and $86.3K. This area has not been tested since early December, making it a logical target should Bitcoin fail to maintain its current levels. A dive into this range could clear out over-leveraged long positions prior to any significant reversal attempt.

If Bitcoin loses this support area, it could fall toward $86,320, with a deeper liquidity level near $80,507 acting as an additional downside pull. How the price interacts with the $89K to $87K zone will be critical in determining if Bitcoin can rebound towards $96K or succumb to a broader downtrend.

Can Bitcoin Surge from This Point?

Currently, Bitcoin (BTC) operates within two overlapping bullish patterns: a smaller ascending triangle representing short-term pressure and a larger ascending trendline that has consistently supported rebounds since November.

Bitcoin has just tapped the lower boundary of the minor triangle, and simultaneously, the Relative Strength Index (RSI) has shown a definitive bullish divergence—a classic indicator that downward pressure is easing, even as prices set marginal new lows. This combination often leads to sharp rebounds if the structural support holds firm.

However, risks remain. A breakdown from this minor structure could expose the major ascending trendline. Holding this line could ensure the bullish trajectory continues, but if lost, it opens broader liquidity sorrows between price levels of $86K and $80.5K—zones that have historically re-set leveraged markets and cleared out weaker long positions.

Farzam Ehsani, CEO of VALR, expressed this sentiment, stating, “Bitcoin’s technical picture reflects this nervousness. Resistance at $92,000 and a narrowing range suggest a decisive breakout is approaching that could set the trend for months ahead.”

Market Reaction to Fed Cuts: Balancing Macro Fears with Technical Signals

The Federal Reserve's 25 basis point cut momentarily elevated BTC to $94.5K before sellers stepped in. This pattern mirrors previous cut cycles where early optimism quickly disappeared.

Chairman Powell indicated that Treasury purchases might remain high—hinting at a form of quantitative easing—while cautioning about rising employment risks and inflation driven by tariffs.

Of the twelve FOMC members, nine supported the cut, indicating strong internal agreement; nonetheless, market reactions deemed the tone more cautious than significantly dovish, resulting in Bitcoin's pullback.

Ehsani continued, “The scrutiny surrounding U.S. government decisions—which involve some of the largest Bitcoin holders—is based on the belief that another round of domestic economic trouble stemming from the bankruptcy of firms with considerable Bitcoin reserves is unacceptable.”

This macro environment now intersects with Bitcoin’s technical setup at a pivotal moment.

Towards $96K: Will BTC Experience a Reversal?

Analysts from CryptoQuant highlight a notable decrease in selling pressure. Deposits into exchanges have fallen dramatically from 88K in late November to just 21K today. Whale deposits dropped from 47% to 21%, and average deposits decreased from 1.1 BTC to 0.7 BTC—indicating that larger sellers have pulled back.

Ray Youssef, CEO of NoOnes, resonated with these observations, informing AMBCrypto, “A dovish tone from the Fed could rejuvenate risk-taking sentiment, potentially driving a 'Santa Rally' for digital assets. This could see BTC reclaiming $100,000, ETH exceeding $3,500, XRP reaching $2.3, and Solana surging towards $150.”

This context frequently allows for relief rallies, with $99K being Bitcoin's first significant upside target, aligning with the lower band of the Trader Realized Price. Further up, resistance areas at $102K and $112K loom. If BTC navigates above the critical liquidity sweep and maintains its ascending structure, a push towards $96K remains feasible.

Youssef neatly summed it up, stating, “Market structure is gradually stabilizing after recent forced unwinds and heavy selling pressure, especially from long-term holders. Still, the overall recovery depth appears limited.”

Final Thoughts

As Bitcoin navigates through these turbulent market conditions, both technical indicators and broader economic signals will play a crucial role in determining its direction in the upcoming days and weeks.