Bitcoin's Market Metrics Reset amid Large Liquidation Event, Prepares for Potential Breakout
Summary:
Bitcoin's price has recently softened, impacting key metrics and flushing out some leverage in the market. This change has resulted in a substantial liquidation event totaling $400 million for Bitcoin and other cryptocurrencies. In response, funding rates have begun to decline. The relative strength index (RSI) readings for Bitcoin have also returned to the midpoint of 50. The current market conditions are drawing comparison to February with the tightening of Bollinger Bands, suggesting a possible pre-breakout phase for BTC/USD. Despite the liquidation event and changing metrics, the acceleration of the bull market remains a crucial factor for Bitcoin's performance.
Bitcoin's price has recently taken a dip, causing a reset in some crucial indicators and forcing out some of the leverage in the BTC/USD 1-hour chart. According to data from Cointelegraph Markets Pro and TradingView, the Bitcoin price hovers around $66,000 after a 5% decline in a single hourly candle.
Whilst the digital asset has faltered by 7% in April to date, the re-evaluation of support is beginning to cool the overheated markets. Coinciding with the latest price decrease, a significant liquidation event occurred, tallying up to $400 million for Bitcoin plus other cryptocurrencies at the time this is written.
CoinGlass's monitoring resource reveals that funding rates have started turning sour as a response to the decline. As the asset price drops, the funding rates dive, as noted by a well-known trader named Jelle on X (formerly Twitter). Jelle emphasized that all leverage must be eradicated before beginning price discovery.
The QCP Capital trading firm shed light on the dramatic shift in the funding landscape in its recent "Asia Morning Color" market updates dispatched to Telegram channel followers. The rapidity of this movement was driven by substantial liquidations on retail-dominated exchanges like Binance.
Additionally, the relative strength index (RSI) measurements for Bitcoin on daily timeframes have receded back to the midpoint of 50, a crucial landmark during upswings.
Turning our attention to volatility, Bollinger Bands on daily timeframes suggest a new phase of pre-breakout for BTC/USD. Matthew Hyland, a renowned analyst, has compared it with February by stating on X that the "Daily Bollinger Bands continue to tighten to levels unseen since the movement initiated from $45k."
In conclusion, despite the investment and trading perils, the bull market's acceleration is crucial, as highlighted by both RSI and Bollinger Bands in December 2023 in a Cointelegraph report.
Published At
4/2/2024 12:10:50 PM
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