One of the most important rules while trading Bitcoin is to expect the unexpected- and with over five instances of 20% higher gains this year alone, it is necessary. To be honest, the volatility that this cryptocurrency has seen over the last three months has been quite modest when compared to the recent developments.
Whether we are talking about multi-million dollar institutional fund managers or simple retail investors, traders who are quite new to the whole BTC bonanza, are often quite stunned with the whole 19% correction that takes place after a local top. What seems even more shocking is that the current price correction of $13,360 from the 10th November all-time high of $69,000 took just 9 days.
Bitcoin’s downside move did not trigger alarming-raising liquidations
Most traders of cryptocurrency have been notorious for high-leverage trading- which has been proven over the last 4 days when over $600 million worth of long futures contracts of Bitcoin were absolutely liquidated. While this might sound like a pretty normal number, it does represent less than 2% of the total futures market of the cryptocurrency.
The first indication that the drop of 19% to a sum of $56,000 is BTC hitting a local bottom would be the lack of any significant liquidation event despite the movement in its price. Had there been much excessive buyers’ leverage being enforced- which is simply the sign of an unhealthy market, the open interest would have transformed suddenly- quite similar to the one that was seen on the 7th of September.
It has also been reported that crypto traders have been borrowing from USDT quite frequently- with the ratio increasing from 7 on the 10th of November to 13 currently. Since the data favors stablecoin being borrowed, this could reflect the positive exposure that the price of Bitcoin is receiving.
While the world of cryptocurrency is quite an uncertain world, most derivatives believe that Bitcoin’s $56,000 was its local bottom.
