- Bitcoin leveraged traders felt the heat as an unexpected crash triggered heavy liquidations.
- Bulls still at the helm despite the liquidation shock.
Bitcoin [BTC] traders experienced a roller coaster of price performance during the April 26 trading session. Bitcoin briefly managed to get back above $30,000, sparking euphoria about its bullish outlook, but another crash took it below $28,000.
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To put things in perspective, Bitcoin’s market cap fell by around $49.13 billion from its all-day high. This makes April 26 officially the most volatile day of the past seven days. Note that despite the sharp crash, the market cap recovered slightly.
Source: Coinmarketcap
Leverage on long liquidations fueled Bitcoin volatility
The $30,000 retest attracted an unusual amount of volatility. A major reason for this is that the price previously showed a bearish trend, followed by a brief period of uncertainty about the direction of the market.
However, the mid-week outcome showed a return of bullish volumes, hence the rebound and retest of the $30,000 range that had previously shown resistance.
Many traders saw the recovery as a sign of demand and a possible push past the resistance range. As such, many traders in the derivatives segment were convinced that Bitcoin would provide a good rally, hence they embraced leverage. This explains why Bitcoin’s recent slap-down has led to heavy liquidations.
#Bitcoin $BTC Futures Contracts Long Liquidations just reached a 1-month high of $12,767,221.75 on #Okayex
The previous 1-month high of $11,622,461.85 was observed on April 19, 2023
View statistics:https://t.co/sC7s1FAoHZ pic.twitter.com/TULKrtlRMk
— glassnode alerts (@glassnodealerts) April 26, 2023
Bitcoin’s long liquidations on April 26 rose to their highest level so far in the month. The liquidations also caused a sharp drop in the estimated leverage ratio as leveraged traders quickly turned to caution.
Source: CryptoQuant
Bitcoin’s long liquidations highlight some of the risks in the market. Some analysts believe the recent rally was a setup for whales to secure exit liquidity.
Bitcoin’s brief rally provided the perfect opportunity for a leverage shakedown. Traders were high on hopium as the market previously struggled to find sufficient momentum.
News that another major bank was in trouble further bolstered optimistic expectations. Investors should also be aware that a bear trap may also be in the offing.
How much are 1,10,100 Bitcoins worth today
Bitcoin has already recovered slightly in the past few hours to the price of $28,995 at the time of writing. The timing is particularly noteworthy as most investors will sit on the sidelines after the midweek events.
Source: TradingView
There is still some uncertainty about BTC’s next move, especially as the market enters a new month.
