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Bitcoin derivatives traders who opened bullish positions when the cryptocurrency reached its all-time high, near $ 34,500, are now facing massive losses.
Data provided by ByBt.com shows that the BTC / USD market settled long contracts worth $ 1.17 billion as of 2130 EST Sunday. The stop-losses were triggered as the price of Bitcoin fell back below $ 30,000 amid a corrective movement of the spot market, leaving derivatives traders with short open positions in a profitable state.
Bitcoin Market Liquidation chart. Source: ByBt.com
The figures indicate that holders of long positions on Binance alone lost $ 339.37 million, followed by Huobi, whose traders suffered losses of $ 258.1 million. That finally marked the worst one-day selloff of the Bitcoin market after November 25 of last year. That day, long traders had lost around $ 999.52 million.
Bullish anyway
None of the recent large long selloffs materialized into a broader downtrend.
Spot traders remained bullish for the long term on Bitcoin due to its growing prominence as a hedging asset among major financial institutions and corporations. The post-November 25, for example, saw the BTC / USD exchange rate rise as much as 114 percent to hit a record high of $ 34,810.
Many analysts admitted that institutional investors have lately used retail-led price drops to buy Bitcoin in droves. As a result, the flagship cryptocurrency has rallied exponentially after developing concrete supports near $ 16,200, $ 17,650, $ 22,000, and the most recent $ 27,500.
For example, a pseudonymous chartist said Monday that Bitcoin’s ongoing crash would wipe out what he believes to be “retail degens,” meaning the cryptocurrency will go from weak hands to strong hands, those who prefer to hold their investments long-term. .
BILLION in long liquidations and the day hasn’t even started yet lmao.
This was clearly necessary to shake up retail degens.$ BTC pic.twitter.com/AMtm5DQfYN
– Byzantine General (@ByzGeneral) January 4, 2021
The so-called “HODLING” sentiment, in turn, comes from a favorable macroeconomic outlook.
People treat Bitcoin as a safe haven against falling bond yields and the US dollar. That is the same reason why billionaire investors like Paul Tudor Jones and Stan Druckenmiller have integrated cryptocurrency into their portfolios. That further explains why MicroStategy, Square, Ruffer Investments, MassMutual, and others have chosen 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 cryptocurrency’s downward price corrections stops at or before said floor before resuming its upward movement.
Bitcoin pulls back after testing $27,678 as support. Source: BTCUSD on TradingView.com
Right now, the 20-EMA wave is just above $ 26,500. Bitcoin price could extend its downward correction to that level to attempt a pullback above $ 30,000. Meanwhile, a slide below the 20-EMA exposes a further bearish move towards the 50-day SMA (blue), which lurks just below $ 21,500.
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