Following the recent downturn in Bitcoin’s price activity, several gaps remain unaddressed. According to crypto expert TehThomas, these gaps could indicate Bitcoin’s next directional move. The presence of two Fair Value Gaps (FVGs) suggests impending volatility as Bitcoin must navigate various liquidity levels before any significant price surge.
Analyzing Bitcoin’s Fair Value Gaps
Thomas’s analysis reveals that Bitcoin has developed fair value gaps both above and below its present support threshold. The initial gap, situated above $117,000, is anticipated to be addressed first. This area is rich in liquidity, making it a likely target for initial market moves, which might result in triggering stop losses and ensnaring traders who prematurely buy into the breakout.
However, this upside breakout may be short-lived, given that only one of the FVGs will be addressed at this level. The subsequent FVG is positioned below the lows seen in early August, just above $111,000. Thomas predicts that a pullback following the breakout will draw Bitcoin back to this level. Ironically, this decline is considered bullish as it addresses the imbalance where demand is substantial.
Similar to the move above $117,000, the retreat to $111,000 is expected to clear internal liquidity, setting the stage for Bitcoin to escape its current trading range and potentially marking the onset of a significant upward trend.
The Implications of Cleared Internal Liquidity
As this strategy unfolds, Thomas highlights the descending trendline on the Bitcoin price chart as a crucial component for continued upward movement. Bitcoin must interact with the upper imbalance of this trendline before experiencing any further decline. This interaction is pivotal in confirming the subsequent price movement.
With the internal liquidity fully addressed by the trend’s conclusion, Bitcoin is poised for a potential rally. The focus then shifts to the built-up liquidity at previous peaks and resistance zones, extending towards $120,000. “This process would complete the cycle of addressing imbalances, capturing liquidity, and initiating an expansion,” Thomas elaborated. Nonetheless, he cautioned that “Sustained higher price movement is unlikely until both zones have undergone thorough scrutiny.”
