I woke up this morning to quite the gift, had my breakfast, and checked my phone and I noticed limit orders I set ages ago managed to fire and I checked the Bitcoin price and we hit $47k.
Now I'm never too phased about dips because my goal is to stack cheap sats so this is right up my alley, but a 10% rip in one day always makes me feel like something is happening so I decided to do some snooping.
So the first thing I found was the fact that Bitcoin did not hit Plan B's floor model target failed for the first time after hitting 3 months in a row. His model predicted 98k as the floor for November and when we hit 58k, you could see traders that use his models start to bug out of the trade.
The dude's got 1.6 million followers, and people stand by his stuff so for one of his models to break will see paper hands let go of their positions.
https://twitter.com/100trillionUSD/status/1465833345384919045
- 100trillionUSD
New variant
Naturally, news of the new variant hit the markets and that will always see people sell off assets for cash. In addition when other illiquid markets are affected investors tend to sell their Bitcoin to cover their other positions.
The taper tease
The news that the Fed will look to taper bond purchases would always hit the market hard if you take away the pacifier, the baby is always going to get upset and the markets sure did throw a bit of a fit
Watching Bitcoin's reaction
Bitcoin had already fallen by almost $10,000 from its newly established all-time high, as the dollar index continues to gain strength, even in the face of really bad Consumer Price Index (CPI) data. These factors have caused a liquidation event in which $971.5 million worth of leveraged longs has been liquidated from their positions in the past two days.
According to bybt Monday was the worst day for leveraged longs as a total of $783.37 million got liquidated as Bitcoin’s price declined from a high of $66,281.57, to close the day at $63,557.87, a 4.10% decline.
The bleeding didn't stop there and by Tuesday, a total of $188.13 million got liquidated as Bitcoin’s price moved from $63,721.20 at the open, to trade as low as $59,016.34, according to coinmarketcap. That represented a 7.38% decline.
Now markets tend to have a little more liquidity during the week when there are trading hours in traditional markets, but during weekends when markets are closed, it's a different story.
As of today, we've had a reported 1.8 billion USD in long's liquidated
https://twitter.com/WClementeIII/status/1467004050910633986
- WClementeIII
and it's pushed the price down to 47k, the moral of the story kids, is don't trade with leverage. If you're going to hang out with your cock and balls thinking Bitcoin is going to run, they going to cart you off the trading floor with your dick chopped off and handed back to you in a lunchbox.
Profit taking in progress
Data from Glassnode suggests that last week’s Bitcoin net flow was positive by $205 million. This could be an indication that there was a sell-off to exchanges as investors start to take profits at current price levels. $1.6 billion were sent to exchanges while $1.4 billion was taken out.
What they on-chain data saying
According to analyst William Clemente whales have begun to sell their Bitcoin positions.
“Long-term holders buy BTC into weakness and sell into strength. We’ve just gotten our first red prints on LTH net position change in over 6 months, showing bull market distribution has begun.”
He further stated, “This is natural bull market behavior; as you can see in 2020 this distribution began in October and peaked out in January of this year.”
If markets are scared that liquidity will dry up due to a lack of central bank intervention, many would consider increasing their cash position. As that selling pushes prices down, it triggers margin calls and the sell-off continues.
Personally, I'm always happy to see leverage cleaned out of the market and I feel it's healthy. If we can push for another 30k kiss and trade sideways for a bit I'd be so happy, but this 40k range is good for stackers nonetheless.
This is just my theory, what is yours?
Have your say
What do you good people of HIVE think?
So have at it my Jessies! If you don't have something to comment, "I am a Jessie."
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