Bitcoin opted for violence with a sudden downward move, causing a 5% loss on the daily chart. At press time, the first crypto by market cap appears to be recovering as it moves back into the mid-zone of its current level.
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Bitcoin is trading at $ 65,442, still up 3.6% on the daily chart. In the short term, BTC price has found support at these levels but could continue to move lower if it breaks below $ 63,000.
BTC is trending down on the daily chart. Source: BTCUSD Tradingview
On the flip side, much of the resistance has gone and BTC appears poised to at least try to get the high range close to its next all-time high of $ 70,000. Above these levels, Material Indicators data still shows $ 62 million in potential mail orders around these levels.
Source: material indicators
In the derivatives sector, the Bitcoin flash crash resulted in some leverage positions being wiped out. As can be seen below, the leverage ratio on the stock exchanges fell sharply after an explosion in mid-October.
Those levels are still much higher than they were in May 2021, when Bitcoin tumbled one of its most serious corrections from its previous all-time high to its annual high of nearly $ 29,000.
So if more traders become optimistic about the BTC price and start making more profits, the leverage ratio could go up. This leaves the market open to sudden moves as liquidation cascades force the price to tend to a level where most operators would willingly or not sell their positions.
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Analyst David Puell investigated the crash of Bitcoin and saw a surge in open interest with positive rewards on the Binance exchange platform, one of the largest in the world. Puell said:
OI acts as fuel for the fire to serve as a predictor of a liquidation event above. Liquidity can be resorted to on the downside by smarter players. Binance, which is holding the OI, makes the bearish signal more reliable. A liquidation event is more likely as CME (Chicago Mercantile Exchange) can only go 2x.
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However, as the event progressed, Puell saw the derivatives premium shift at a discount. This has led the analyst to see an entirely bearish bias to believe that the downward move could have been healthy for Bitcoin.
Still, the price of BTC has to stay constant as it appears to be entering another phase of consolidation. There are other factors that could bring volatility to the market, such as the activation of Taproot, the upgrade from Bitcoin that is slated to activate later this week or sometime next week.
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As this data shows, the road to further profits in the fourth quarter of 2021 could prove difficult. In addition, the macro outlook is becoming complex. Yesterday, Bitcoin appeared to have reacted to a possible default by the Chinese real estate company Evergrande.
While it looks like #Evergrande didn’t turn out as originally reported, those rumors have negatively impacted financial markets (S&P 500 shown here) and #Bitcoin. Bitcoin’s price is now down about 4% to about $ 64,5,000 pic.twitter.com/NEIK9QP1wB
– Jan Wüstenfeld (@JanWues) November 10, 2021