Bitcoin Sees Volatility as It Shakes Off Overleveraged Traders
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| By Marija Matic |
That was quite a flush last night! More than $300 million in long positions got liquidated as Bitcoin (BTC, “A”) swiftly dropped from $43,000 to $40,400 within seven minutes.
Despite the sudden drastic movement, the macro landscape remains unchanged. This was simply a shakeout targeting overleveraged traders, which is evidenced by the notable absence of negative news regarding crypto.
On the contrary, there are some positive developments worth mentioning, which you can find in our Notable News, Notes & Tweets section below.
And indeed, while the slip feels steep, it only represents a 7% drop. That’s barely a blip on the radar in the volatile world of crypto. Last night, Bitcoin was stopped by the 21-day exponential moving average (represented by the yellow line below), which was acting as support:
Notably, the parabolic curve (blue line) is unaffected by the rapid dip so far, as evidenced on this chart.
But most importantly, the macro bullish trend is undisturbed on the higher time frame. This means we are still in a market that’s trending upward.
If the $40,000 level breaks down confidently, however, then the deeper correction might start.
Concurrently, Ethereum (ETH, “B+”) tested its support at $2,140 in futures markets, coinciding with eager buyers who front-ran this level on spot markets:
Both support at $2,140 and resistance at $2,400 remain key levels of interest for ETH in the near term.
On a broader note, digital asset investment products have experienced an 11th consecutive week of inflows totaling $43 million, with a notable increase in short position inflows prompted by recent price gains and perceived downside risks.
Bitcoin products remain the primary focus of investors, with year-to-date inflows reaching $1.7 billion. Regionally, Europe is still leading with optimism.
Meanwhile, blockchain equities saw their largest weekly inflows on record at $126 million, according to CoinShares data!
In short: crypto is growing. And it’s only going to get bigger when the bull truly starts its run.
Notable News, Notes & Tweets
- Decentralized exchange Uniswap expands to Bitcoin sidechain Rootstock (RBTC, Not Yet Rated).
- Google is revising its crypto ads policy to include the advertising of “Cryptocurrency Coin Trusts” targeting the United States amid the potential January spot Bitcoin ETF approval anticipation.
This holds considerable significance, especially considering the typically stringent and restrictive stance of web2 giants toward crypto advertising!
- If you convert $1,000 of Tether (USDT) to USD on Coinbase there's a $27.50 fee. If you go to advanced trade (USDT/USD) and market sell, it's like 3 cents.
- Tether announces a new wallet-freezing policy for OFAC-sanctioned persons.
- The most popular crypto wallet, MetaMask, has integrated with multiple local payment platforms across the world, which should make mass adoption easier.
What’s Next
BTC spot ETFs are slated for their next round of approval opportunities within the next 30 days, and the market has displayed significant interest in accumulating exposure to BTC ahead of the anticipated launches.
If you’re looking for weakness to buy additional Bitcoin, just be wary. Savvy investors will look for stronger evidence than intraday price action to determine whether they’re looking at a significant drop, or just run-of-the-mill volatility.
Last night’s quick dip appears to be merely a one-time leverage flush lacking substantial follow-through for now. However, tomorrow's CPI readings might bring more volatility.
The conclusion of 2023 promises to be an intriguing one.
Best,
Marija
