Bitcoin crashed below $ 30,000 on Friday when traders panicked over a technical bug that allowed people to spend the same cryptocurrency unit twice.
Google Trends for the keyword “Double Spend” – as the bug is known – got a perfect score of 100.
That escalated quickly! #FUD #Bitcoin pic.twitter.com/Nkx95vy4QF
– Ciara Sun (@CiaraHuobi) January 22, 2021
According to BitMEX Research, the Bitcoin blockchain found a small double overhead of around 0.00062063 BTC ($ 21). The claim prompted the cryptocurrency community to discover vulnerabilities in Bitcoin’s public ledger system – a 51% attack that allowed miners to take control of the network.
However, fears later subsided when Paolo Ardoino, CTO of BitMEX, clarified that there was no double-spend event. In fact, he told Insiders via email, “What happened is two blocks were mined at the same time,” which resulted in a chain reorganization.
“[It] did not lead to double spending, ”he added.
During the course of the panic, the cost of buying a bitcoin fell by about 9 percent, reaching $ 28,372 on the Coinbase US exchange. Other factors, including a prevailing bearish corrective mood and profit-taking behavior, also contributed to the decline.
But the crash was short. Bitcoin quickly rose again as it hit levels below $ 30,000, indicating renewed demand for cryptocurrency near the stated price floor. The BTC / USD exchange rate shot back over $ 30,000 in no time and surpassed $ 31,700 in the pre-trading session in London.
Bullish divergence in Bitcoin 4H
Analysts noted that thanks to what is known as a bullish divergence pattern, Bitcoin has better chances of continuing its retracement. In it, the price of an asset moves down, but its momentum increases. Overall, this signals that bearish traders, which previously drove prices down, are gradually losing power.
“Nice dragonfly / hammer on the 4 hour [chart]”Said Scott Melker, the author of the Wolf Den Newsletter.” Potential Bull Div comes from overselling. I’ve seen worse reversals, if only temporarily. “
Bitcoin saw a similar retracement rally – of about 49 percent – after closing below $ 30,000 in the first week of January. Since then, the cryptocurrency appears to have built a significant area of support around this level, as evidenced by another uptick during the January 11th trading session.
A deeper retracement ahead?
Cryptocurrency market analyst Jebb McAfee recalled the tendency for Bitcoin to undergo a deeper downward revision after reaching new record highs throughout its history.
In a video released late Thursday, the YouTuber presented the cryptocurrency’s 21-week exponential moving average as ideal long-term support, adding that staying above it would keep BTC / USD in bullish territory. As of now, the 21-WMA sits near $ 22,000.
“It’s not that scary,” Jebb said of the recent Bitcoin price drop, adding that it was more of a “buying opportunity” for a long-term investment setup.