The central theses
- Bitcoin plunged 5% in minutes to hit a low of $ 56,200.
- The downturn caused massive losses across the board.
- While some believe the move was part of a stop-loss hunt, the technical data suggests a steeper decline.
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The volatility in the cryptocurrency market is widespread and is wiping out many overfunded Bitcoin traders.
Bitcoin wipes out overfunded traders
Bitcoin has completed a turnaround of 9,500 points in the last six days and achieved a market value increase of almost 19%.
According to Willy Woo, the impressive upswing appeared to be calm as there were no significant liquidations. Such market behavior was strange, as speculators typically don’t “profit without being a little right”.
“It’s like walking into a forest and realizing that the birds just stopped tweeting,” said Woo.
Future long liquidations of Glassnode
Market makers seem to have heard Woo’s wise words when Bitcoin suddenly plunged 5.20% from a high of $ 59,920. Bybt data shows that leveraged positions worth $ 663,007,804 have been liquidated in the past four hours.
The largest single liquidation order was placed on the Seychelles-based cryptocurrency exchange Huobi, valued at USD 14,680,000.
Despite the massive losses incurred in such a short period of time, independent researcher and investor PlanB believes the recent downturn was part of a “stop-loss hunt” that Bitcoin has needed so far March towards $ 60,000 or higher.
Nice stop-loss chase .. again. Now that all leveraged longs have been liquidated, we finally have room to crack $ 60,000 in April. pic.twitter.com/PgSVXUSAuA
– PlanB (@ $ 100 trillion) March 31, 2021
Technical data highlights other incoming losses
From a technical point of view, Bitcoin is facing further losses.
The sequential indicator Tom DeMark (TD) showed a sell-signal on the 12-hour chart. The bearish formation evolved as a green nine-candle holder, indicating a one to four 12-hour candle correction.
Another spike in selling pressure could cause Bitcoin to drop to the 38.2% Fibonacci retracement level at $ 54,600 before resuming the uptrend.
BTC / USD on TradingView
Given the strength of the 78.6% Fibonacci retracement level at $ 59,300, just a 12 hour candlestick near this resistance barrier could invalidate the bearish outlook.
If so, Bitcoin would likely be heading for its recent all-time high of nearly $ 62,000 or more higher.
Disclosure: At the time of writing, this author owned Bitcoin and Ethereum.
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