Bitcoin derivatives traders who opened bullish positions when the cryptocurrency hit its record high of $ 34,500 are now staring at massive losses.
Data provided by ByBt.com shows the BTC / USD market liquidated $ 1.17 billion worth of long contracts on Sunday in 2130 EST. The stop losses were triggered when the Bitcoin price fell back below $ 30,000 on a corrective spot market move and derivatives traders left open short positions in a profitable state.
Bitcoin Market Liquidation chart. Source: ByBt.com
Figures show that long-position holders at Binance alone lost $ 339.37 million, followed by Huobi, whose traders lost $ 258.1 million. This ended up being the bitcoin market’s worst one-day liquidation since November 25th last year. On that day, long traders had lost about $ 999.52 million.
None of the recent large long liquidations resulted in a broader bearish trend.
Spot traders remained optimistic about Bitcoin over the long term, as it is becoming increasingly important as a hedging tool for established financial institutions and companies. In the period after November 25, for example, the BTC / USD exchange rate rose as much as 114 percent to a record high of $ 34,810.
Many analysts admitted that institutional investors have recently used slump in retail prices to buy Bitcoin en masse. As a result, the flagship cryptocurrency has grown exponentially after developing concrete supports near $ 16,200, $ 17,650, $ 22,000 and the last $ 27,500.
For example, a pseudonymous chartist said Monday that Bitcoin’s continued decline would wash out what it believes to be “retail degens”; H. The cryptocurrency will switch from weak hands to strong ones – those who would prefer to hold onto their investments for the long term.
A billion in long liquidations and the day hasn’t even started lmao.
This was clearly needed to take down the degens in retail. $ BTC pic.twitter.com/AMtm5DQfYN
– Byzantine General (@ByzGeneral) January 4, 2021
The so-called “HODLING” mood is in turn based on a supportive macroeconomic outlook.
People view Bitcoin as a safe haven against falling bond yields and the US dollar. This is the same reason why billionaire investors like Paul Tudor Jones and Stan Druckermiller have incorporated the cryptocurrency into their portfolios. This further explains why MicroStategy, Square, Ruffer Investments, MassMutual, and others chose to invest in Bitcoin.
Bitcoin technical setup
Bitcoin investors have also treated the 20-day exponential moving average wave (the green curve in the chart below) as their medium-term support. Each of the downward price corrections of the cryptocurrency will stop at or before this lower limit before going up again.
Bitcoin pulls back after testing $27,678 as support. Source: BTCUSD on TradingView.com
Currently, the 20-EMA wave is just above $ 26,500. Bitcoin price could extend its downward correction to this level in an attempt to retreat above $ 30,000. A slip below the 20 EMA shows another bearish move towards the 50-day simple moving average (blue) lurking just below $ 21,500.