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Use wipeout? Why Bitcoin Might Retest Low Levels

Bitcoin opted for violence with a sudden downward move, causing it to lose 5% on the daily chart. At press time, the first cryptocurrency by market capitalization appears to be recovering as it moves back into the mid-zone of its current level.

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Bitcoin is trading at $ 65,442, still up 3.6% on the daily chart. In the short term, the price of BTC has found support at these levels, but it could go further down if it breaks below $ 63,000.

BTC is trending down on the daily chart. Source: BTCUSD Tradingview

On the flip side, much of the resistance has gone and BTC appears ready to at least try to get the high range close to its next all-time high of $ 70,000. Above these levels, Material Indicators data still shows $ 62 million in potential mail orders around these levels.

Bitcoin BTC BTCUSDSource: material indicators

In the derivatives sector, the Bitcoin flash crash resulted in some leverage positions being wiped out. As can be seen below, the leverage ratio on the stock exchanges fell sharply after an explosion in mid-October.

Those levels are still much higher than they were in May 2021, when Bitcoin tumbled one of its strongest corrections from its previous all-time high to near $ 29,000 at the beginning of the year.

Bitcoin BTC BTCUSDSource: Glassnode

So if more traders become optimistic about the price of BTC and make more profits, the leverage ratio could increase. This leaves the market open to sudden moves as liquidation cascades force the price to tend to a level where most operators would willingly or not sell their positions.

Related reading | Bitcoin Extends Correction Why The Bulls Might Back Up

Analyst David Puell investigated the crash of Bitcoin and saw a surge in open interest with positive rewards on the Binance exchange platform, one of the largest in the world. Puell said:

OI acts as the fuel for the fire to use the above as a predictor of a liquidation event. Liquidity, on the flip side, can be attacked by smarter players. Binance, which is holding the OI, makes the bearish signal more reliable. A liquidation event is more likely as CME (Chicago Mercantile Exchange) can only go 2x.

Why $ 100,000 per bitcoin might see some obstacles

In the further course of the event, however, Puell saw the premium for derivatives shift towards a discount. This has led the analyst to see an entirely bearish bias to believe that the downward move could have been healthy for Bitcoin.

Still, the price of BTC has to stay constant as it appears to be entering another phase of consolidation. There are other factors that could add volatility to the market, such as the activation of Taproot, the upgrade from Bitcoin that is slated to activate later this week or sometime next week.

Related reading | Bitcoin supply looks illiquid as long-term owners hold back from selling

As this data shows, the path to further profits in the fourth quarter of 2021 could prove difficult. In addition, the macro outlook is becoming complex. Yesterday, Bitcoin appeared to have reacted to a possible default by the Chinese real estate company Evergrande.

While it looks like #Evergrande didn’t turn out as originally reported, those rumors have had a negative impact on financial markets (S&P 500 shown here) and #Bitcoin. Bitcoin’s price is now down about 4% to about $ 64,5,000

– Jan Wüstenfeld (@JanWues) November 10, 2021

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