This week, Bitcoin plummeted to $30,305, and the liquidation of leveraged long derivatives exacerbated the decline; options traders were completely short on Ethereum's native asset ETH. Although Bitcoin has plummeted, many people in the industry are still optimistic about its trend and believe this is a healthy correction.
Commentary: Bitcoin plummeted to $30,305 this week, and the liquidation of leveraged long derivatives exacerbated the decline; option traders are completely short on Ethereum's native asset ETH. Although Bitcoin has plummeted, many people in the industry are still optimistic about its trend and believe this is a healthy correction.
As of 21:00 UTC on the writing day (4 pm Eastern Time), the trading price of Bitcoin (BTC) is approximately $33,277. This is down 10.9% from the previous 24 hours.
Bitcoin 24-hour range: USD 30,305-38,947 (CoinDesk 20).
The BTC trading price is above the 10-hour line, but far below the 50-hour moving average on the hourly chart, which is a sideways bearish signal for market technicians.
According to data from CoinDesk on the 20th, the price of Bitcoin collapsed in the past 24 hours, from $38,947 at 22:00 (5pm) UTC (Eastern Time) on Sunday to 17:00 on Monday, UTC (Eastern Time). (12 o'clock in the afternoon) as low as US$30,305. In 19 hours, the world's oldest cryptocurrency fell by US$8,642, a drop of more than 22%. Since then, the price has risen slightly, but the increase is not large, at $33,277 at press time.
"Bitcoin has seen a sharp correction, and I believe some traders are welcome because they feel that they have missed the opportunity to buy bottoms," Katie Stockton and Fairlead Strategies analysts pointed out.
Stockton still insists on her prediction last week that the "support" of Bitcoin is somewhere below $25,000, where she expects traders to buy frantically to support the price. "From the important levels of $25,000, it is difficult to determine where the support level will eventually be found, but considering that it is still overbought, it cannot happen immediately."
Jason Lau, chief operating officer of OKCoin, a San Francisco cryptocurrency exchange, said that the derivatives market has exacerbated Bitcoin's decline. "The overall market correction is continued by the prolonged squeeze of highly leveraged derivative positions," Lau told CoinDesk.
"According to data from the data aggregator Bybt, Sunday is the largest liquidation day in three months so far." Binance alone processed more than $500 million in long liquidation, which is a margin call for the cryptocurrency version.
However, according to some market observers, the sell-off of Bitcoin is not necessarily a bad thing for cryptocurrencies.
"Today's decline should be seen as a healthy correction by wise institutions, who bought BTC from $20,000 all the way to $30,000," said David Lifchitz, chief investment officer of Quantum Corporation ExoAlpha. "One of the worrying signs that we discussed with investors is not that the price of Bitcoin is rising, but its speed, how fast it actually moves and how much it moves each day."
In fact, with the sharp increase in the price of Bitcoin and the subsequent decline, as happened on Monday, the market's volatility factor has been amplified. This has resulted in the 30-day volatility indicator of the world's oldest cryptocurrency being pushed to 71.9%, a level that has not been seen since June 5, 2020.
Despite the decline, Rupert Douglas, head of institutional sales at crypto custody provider Koine, remains unwaveringly bullish. "The market has doubled from its previous high in a few weeks," Douglas said. "This is very unusual for the way a market works, (but) I think we will go higher and exceed $500,000 by 2023."
Although this is an announcement of Bitcoin's future price giant, Douglas also pointed out Bitcoin's notorious volatility. "There will be a sharp reversal on the road, so buy on dips instead of chasing up."
ETH option exercise price is less than $1,000
ETH, the second largest cryptocurrency by market value, fell on Monday, with a trading volume of about $1,018. As of 4:00 pm UTC (Eastern Time), it fell 19% in 24 hours.
ETH options traders seem to be wandering, like a crow looking for something shiny, waiting for the possibility of the asset to dive further. According to data from data analysis company Skew, the exercise price of the largest open interest in the ETH options market on Sunday was US$400, followed by US$480 and then US$800.
Denis Vinokourov, head of research at the crypto-brokerage firm Bequant, also pointed out that traders are likely to hedge these bets, with at least some open call options. Call options give the buyer the right to buy at $1920, but not an obligation. "Compared with other options, the $1,920 call exercise on January 29 is particularly active today. This indicates another round of strong stop-limit buying for the second largest crypto asset."