Bitcoin price traded sideways under $72,000 today as markets remained on edge amidst Middle East tensions, and traders braced for upcoming economic data with the US PPI set to be released tomorrow.
The total crypto market cap edged up slightly by 1.1% to approximately $2.5 trillion, moving in line with the widely tracked crypto fear and greed index, which increased by 2 points to 44, remaining firmly in neutral territory.
For altcoins today, price action was relatively slow, and gains were limited to only a few outliers that rallied on project-specific catalysts.
Why is Bitcoin stuck?
Bitcoin price traded sideways between $70,617 – $71,710 as uncertain crypto investors chose to avoid making major bets, preferring to remain on the sidelines for the time being and look for direction from both the geopolitical and macroeconomic fronts.
First, there’s a lot of uncertainty around the escalating situation in the Middle East, specifically regarding the conflict between the US, Israel, and Iran, where a recent 14-day ceasefire attempt has failed to result in a permanent agreement during high-level talks in Islamabad.
The primary concerns are centered around the Strait of Hormuz, which has effectively remained blocked or severely restricted for nearly six weeks since the war erupted in late February.
Iran has reportedly continued to control access to the waterway, which has stoked fears of a massive supply disruption.
Oil prices have reacted sharply to the news, which has returned above $100, with Brent crude surging past $102 per barrel today.
Tensions have intensified even more after US President Donald Trump announced a naval blockade of Iranian ports and deployed destroyers to the Strait to begin clearing naval mines following the collapse of the weekend negotiations.
Although the US Central Command (CENTCOM) clarified that the move is not a total closure of the waterway, with US forces set to allow neutral transit for ships not traveling to or from Iran, it is still an effective attempt to isolate Iran economically.
This has served to drive investors further away from high-risk markets like cryptocurrencies and equities.
Bitcoin has fared relatively well under the circumstances, considering that it has managed to hold its position above the $70,000 mark, which is a key psychological support level for many traders.
Crypto investors are also anxiously awaiting tomorrow’s release of the latest US PPI.
Market pundits largely expect the data to come in slightly higher than previous months, reflecting the inflationary pressure caused by the recent energy shock.
So far, the Fed has maintained a cautious stance as recent inflation data have consistently exceeded targets, leading markets to virtually price out any chances of rate cuts in the first half of the year.
If the PPI data comes in lower than expected, it could offer some much-needed relief to the markets. However, if the numbers remain hot, it could confirm fears that high interest rates are here to stay, keeping Bitcoin in its current sideways grind.
What’s next for Bitcoin?
For now, Bitcoin bulls need to navigate a dense concentration of high-leverage liquidation clusters between $72,000 and $73,000, where significant short positions are currently sitting.
Successfully absorbing this selling pressure and breaking past the $72,200 resistance zone could position Bitcoin for a short-squeeze fueled rally towards the next major liquidity pocket at $74,000.
On the downside, however, there’s a massive support wall of long liquidations near the $70,000 mark, which makes it a magnet for price action if the market fails to break the immediate overhead resistance.
Another critical factor that could dictate Bitcoin’s next move is the current positions of CME gaps on the futures chart.
According to crypto analyst Ted Pillows, there are currently three short-term gaps that traders are watching closely: one on the upside near $73,200 and two on the downside at $69,500 and $67,200. See below.
These gaps often act as price magnets, as the market historically has a high tendency to fill these voids created during weekend or holiday breaks in institutional trading.
Interestingly, these levels align perfectly with the liquidation clusters: the $73,200 gap sits right in the heart of the short-liquidation zone, while the $69,500 gap adds further weight to the long liquidation wall sitting just below the current price.
This suggests a move higher could trigger a rapid short squeeze, as the price would simultaneously fill the $73,200 CME gap and force short sellers to buy back their positions, potentially catapulting Bitcoin toward the $75,000 level.
At the time of writing, Bitcoin price was trading at $71,976, up 1.6% on the day.