Over the past 24 hours, Bitcoin (BTC) has experienced a surge in volatility, with prices fluctuating between $29,000 and $27,000 given the lack of liquidity in the market. This sudden price action has had a significant impact on bulls and bears.
However, at the time of this writing, Bitcoin has managed to recover the USD 29,000 level, and it remains to be seen if it can continue to recover and consolidate above its key psychological level of USD 30,000, supporting the continuation of its bull run or that it will be. further slumps in the coming days or weeks.
False rumors are causing Bitcoin investors to liquidate en masse
According to to Satoshi Club, it was initially believed that the rumors about the US government and the sale of Mt. Gox were true, leading to panic selling among Bitcoin traders. However, it was later confirmed that the data was misclassified and no such sales took place.
The impact of these rumors on the market was significant as traders were already tense due to the high volatility in the market. The news of possible large-scale sales by the US government and Mt. Gox, a now-defunct Bitcoin exchange, only added to the uncertainty and fear among traders.
The market panic led to the liquidation of $300 million in positions at the time of writing and the wiping out of $1 billion in outstanding interest within 24 hours. This was a major blow to both long and short traders, as many were forced to exit their positions at a loss.
Open interest can influence the price of Bitcoin as it reflects the degree of market participation and sentiment. When outstanding interest is high, it suggests increased interest and activity in the market, potentially leading to price movements.
Since then, however, the market has recovered and Bitcoin’s value has risen again. The funding rate has returned to around 0.003, indicating that traders are no longer overleveraged, and outstanding interest has also decreased, indicating a lack of significant activity in the market.
Will BTC Reclaim the $30,000 Mark?
Material Indicators, a leading provider of cryptocurrency analytics, has analysed the weekly BTC/USDT chart, which shows bid liquidity rising and demand liquidity falling. According to Material Indicators, when bid and ask liquidity becomes more concentrated around a price point, it dampens volatility, leading to a sideways heel until one side makes a move.
According to Material’s analysis, this type of price action differs from what was observed yesterday, as bids and asks initially moved up, signaling a clear path for a pump. However, as things started to get “toppy”, inquiries began to fall, eventually dumping into the liquidity void created on the way up.
In addition, CryptoCon, a leading provider of cryptocurrency analytics marked the recent drop in Bitcoin’s value, which saw a 15% drop. This drop allowed the Chaikin Money Flow (CMF) indicator to reset somewhat as it comes dangerously close to hitting the Mid-Top .35 line.
The CMF indicator is a technical analysis tool that measures the buying and selling pressure in the market. When the CMF is above zero, the buying pressure is stronger than the selling pressure, and vice versa when it is below zero. The Mid-Top line at .35 represents the mid-cycle for Bitcoin’s real gains.
According to CryptoCon, Bitcoin’s mid-top cycle is approaching soon, but it’s only half of Bitcoin’s “true profit” in a cycle. This means there is still significant potential for Bitcoin to make further gains in the market.
Featured image of Unsplash, chart from TradingView.com