Bitcoin (BTC) swapped bullish gains for chop into Jan. 31 as the end of the month saw nervous price action.
BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView$46 million of longs liquidated
Data from Cointelegraph Markets Pro and TradingView tracked a less confident BTC/USD as it briefly wicked to just above $22,500 on Bitstamp overnight.
A rebound saw the pair flip $23,000 to short-term resistance, and was still trading below that level at the time of writing.
The stakes remained high for traders both long and short with the monthly close just hours away. This was to be followed by interest rate decisions from the United States Federal Reserve on Feb. 1, along with the European Central Bank (ECB) a day later.
With volatility likely lying in wait, liquidations mounted despite Bitcoin maintaining a fairly narrow trading range.
The trip to $22,500 sparked $46 million of long liquidations on Jan. 30, which according to data from Coinglass was the highest daily total of 2023 so far.
Bitcoin liquidations chart. Source: CoinglassFurther data from on-chain analytics resource Material Indicators meanwhile highlighted the tense situation on the Binance order book.
Bid and ask liquidity remained in flux, with incremental shifts up and down having a tangible impact on BTC price trajectory. Bids just below $22,000 and asks at $24,000 kept BTC/USD in check.
BTC/USD order book data (Binance). Source: Material Indicators/ Twitter“It's worth noting that this is the same block of bids that has been pushing BTC price for weeks and because it's prone to move, could end up getting rugged,” Material Indicators commented in a Twitter thread on Jan. 30.
Continuing, analysis said that the location of the liquidity was “no coincidence,” singling out Bitcoin’s old all-time high from 2017 as a “last stand” support zone should current levels fail to hold.
BTC/USD annotated chart. Source: Material Indicators/ TwitterCrypto traders stem "dry powder" inflows
Catalysts for a Bitcoin and altcoin comedown had already been mounting at the week's Wall Street open.
Related: Best January since 2013? 5 things to know in Bitcoin this week
U.S. equities lost ground on Jan. 30, with market-wide nerves over the Fed showing themselves in decreased risk appetite.
This was also conspicuous on crypto exchanges as stablecoin deposits cooled, reducing what one analyst called "dry powder" available for deployment into cryptoassets.
"Right now there is a negative correlation between price & stablecoin deposits. Of course this is not the only one indicator which we need to check but Fed meeting will be held within this week and we also see this negative correlation," Kripto Mevsimi, a contributor to on-chain analytics platform CryptoQuant, summarized in a blog post.
"We can expect high volatility within this week however we need to be careful since there is not much dry powder coming into exchanges anymore."An accompanying chart showed a divergence in stablecoin deposits relative to BTC/USD growth in the second half of January.
BTC/USD vs. stablecoin deposits chart (screenshot). Source: CryptoQuantThe views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
