Bitcoin’s slump to just $ 30,305 was compounded by leveraged long derivative liquidations. Options traders are completely bearish of Ether, Ethereum’s indigenous asset.
- Bitcoin (BTC) is trading at $ 33,277 as of 9:00 PM UTC (4:00 PM ET). 10.9% less than in the last 24 hours.
- Bitcoin’s 24-hour range: $ 30,305 to $ 38,947 (CoinDesk 20)
- BTC above the 10-hour average but well below the 50-hour moving average on the hourly chart, a sideways bearish signal for market technicians.
Bitcoin’s price has fallen in the past 24 hours from $ 38,947 at 10:00 PM UTC (5:00 PM ET) on Sunday to $ 30.305 at 5:00 PM UTC (12:00 PM) Monday, according to data from CoinDesk 20 In 19 hours, the world’s oldest cryptocurrency fell $ 8,642, a loss of over 22%. Since then, the price has gone up slightly, but not by much, at $ 33,277 at press time.
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“Bitcoin is seeing a retracement of its steep spike, which some traders are sure to welcome as they felt they had missed the opportunity to add to the weakness,” noted Katie Stockton, an analyst for Fairlead Strategies.
Stockton is still sticking to its prediction from last week that Bitcoin’s support level will be somewhere below $ 25,000, where it expects traders to flood the market with buy orders and support price. “It is difficult to see where multi-level support will ultimately be spotted above $ 25,000, but it is unlikely that it will happen immediately given the still overbought conditions.”
According to Jason Lau, chief operating officer of the San Francisco-based cryptocurrency exchange OKCoin, the derivatives market has exacerbated the fall of bitcoin. “The general market correction was sustained by long pressures on highly leveraged derivatives positions,” Lau told CoinDesk.
According to the data aggregator Bybt, Sunday was by far the largest liquidation day in three months. Binance alone processed long liquidations worth over $ 500 million, the cryptocurrency version of a margin call.
However, according to some market watchers, Bitcoin’s sell-off isn’t necessarily a bad thing for the cryptocurrency.
“Today’s decline should be viewed as a healthy correction by intelligent institutions [that] bought BTC from $ 20,000 en route to $ 30,000, “said David Lifchitz, chief investment officer of quant firm ExoAlpha. “One worrying sign that we discussed with our investors was not the rise in the price of Bitcoin, but its speed, the speed at which it was moving and the amplitude of the daily movements.”
Indeed, the volatility factor in the market is increasing as Bitcoin, like on Monday, makes huge price gains and subsequent losses. This has resulted in the 30-day volatility metric of the world’s oldest cryptocurrency soaring to 71.9%, a level not seen since June 5, 2020.
Despite the decline, Rupert Douglas, head of institutional sales at crypto custody provider Koine, remains steadfastly optimistic. “The market has doubled from its previous high in a couple of weeks,” said Douglas. “It’s highly unusual for a market to behave the way it does (but) I think we’re going to go much higher, above $ 500,000 by 2023.”
While this is a pretty mega-bullish proclamation of the future price of Bitcoin, Douglas also noted Bitcoin’s infamous volatility. “There will be sharp reversals along the road, so buy dips, not rallies.”
The ether option strikes below $ 1,000
The second largest cryptocurrency by market cap, Ether (ETH), fell on Monday, trading at $ 1,018, and fell 19% in a 24-hour period at 7:00 p.m. UTC (4:00 p.m. ET).
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Ether options traders seem like crows looking for shiny things to hover over the possibility of the wealth plunging even further. The largest open interest strike in the Ether options market on Sunday was $ 400, followed by $ 480 and $ 800, according to data analytics firm Skew.
Denis Vinokourov, head of research at Crypto Brokerage Bequant, also noted that traders are likely to hedge these bets with at least some open interest in calling, which gives the buyer the right, but not the obligation, to buy at $ 1,920. “The January 29 call strike of $ 1,920 is particularly active today compared to other options. This points to another round of heavy buying purchases for the second largest crypto asset. “
The digital assets of CoinDesk 20 are all red on Monday. Notable Losers as of 9:00 PM UTC (4:00 PM ET):
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- Oil was down 1%. Price per barrel of West Texas Intermediate Crude: $ 52.08.
- Gold was in the red at 0.20% and at $ 1,844 at press time.
- The 10-year US Treasury yield rose to 1.138 on Monday and was in the green by 1.4%.