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Crypto traders in the UK woke up to a large dump from bitcoin and cryptocurrencies in general, triggering more than $400 million in liquidations.
An unexpected reverse
After this sharp, and what was for many, a reasonably unexpected pull back, the question in the minds of a lot of traders must be “Is this the start of a typical 30% corrective move for crypto, or is this just a market liquidation event with a move back to the upside to follow?”
Source: Trading View
Bitcoin had been serenely moving sideways inside a triangle through Friday to Sunday, but at midnight going into Monday all changed. The triangle was broken to the downside and in the space of just 3 hours, the price plunged all the way down to $40,450.
According to CoinGlass, more than $400 million was triggered in liquidations on both the long and the short side. Obviously, far more longs were wiped out than shorts, by a ratio of around 7 to 1.
The build up of longs was accumulating due to the thinking that the bitcoin pump was going to go all the way to the $48,000 level. The chances are that this will still happen, but the path to this level is a lot clearer now that this large tranche of leveraged longs has been liquidated.
Higher or lower?
As can be seen on the chart above, once the liquidation wick had done its thing, the price went back to the 0.618 fibonacci level, where it now appears to be consolidating. By the end of Monday it may be clearer as to whether the price will continue to consolidate and start to press back up, or whether the 30% to 40% correction might still come to pass.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.