This past weekend, bitcoin had a rough time as the largest cryptocurrency made its way past $12,000 to $12,112 in trading just after midnight Sunday and within 30 minutes of reaching this level, last seen in June 2019, it crashed to about $10,635.
Since then, we have made our way back above $11,000, and bitcoin started trending on Chinese Twitter. Bitcoin was the 9th most trending topic, which is the highest it has ever climbed.
“Clearing resistance at $10,000-$10,500, which coincided with the downtrend line from the late 2017 highs and first-quarter 2020 highs, established a higher high for Bitcoin confirming a new tactical uptrend,” said Rob Sluymer, technical strategist at Fundstrat Global Advisors.
“In the short-term, Bitcoin’s daily momentum indicators are overbought (as they are for gold), but beyond some very near-term choppy trading, Bitcoin is likely to continue to trend to its next resistance level at $13,800,” he said.
During the weekend’s shenanigans, a total of $1.38 billion were liquidated in all futures markets. About $400 million were liquidated on OKEx and Huobi, and the largest single liquidation order worth about $10 million occurred on BitMEX’s bitcoin perpetual swap. 176,294,051 contracts got liquidated on derivatives exchange BitMEX, of which 28,545,824 were the shorts getting liquidated and 147,748,227 in longs.
The bigger picture remains unchanged
The pullback came following the huge amount of bitcoin moved to the exchanges. According to the data from Crypto Quant, the mean inflow of BTC to crypto exchanges, especially Coinbase and Binance, reached the same level as that of March before the digital asset plunged to $3,800.
Another warning sign before the drop came in the form of daily active addresses that weren’t keeping up with the surging price. “A telltale bearish divergence formed yesterday, as the price continued to climb toward $12k despite DAA dropping from 1.06m on Friday, to 959k on Saturday (a ~-9.5% drop),” stated Santiment.
However, such a pullback isn’t out of the ordinary for bitcoin. Unlike this mere 15% correction, during the last bull market uptrend, there have been at least six pullbacks of more than 30%, noted trader Josh Rager.
Moreover, crypto-assets particularly are “known to experience multiple blowoffs on the way up given the high use of leverage and how fragmented liquidity is,” as we saw in 2017 and 2019.
“Bigger picture remains unchanged. Higher highs ahead in 2020 IMO,” he said.
Bitcoin has made history
It has Monthly Closed above $10.800 for only the second time in its history
— Rekt Capital (@rektcapital) August 1, 2020
Such corrections are opportunities to buy the dip before bitcoin makes it's way higher.
Bitcoin has been rallying strongly after rising above $10,000 recently. The weekend’s notable movement recalls a similar phenomenon in 2019 when the digital assets recorded outsized gains during Saturday and Sunday.
The market, however, remains bullish as ever as trader Crypto Squeeze puts it, “We're in the early phase of an exponential Crypto bull market.”