On Saturday, BTC found itself breaking into the $60k region. The sudden price rise was as surprising as it was exhilarating. BTC had been in the $50k for quite a while and trading sideways for a few days. Traders observed price ranges between $49k to $54k. Evidence of this is seen via Fibonacci retracement on the graph below.
Charts courtesy Tradingview.com (Click image for larger view)
So, why the sudden drop? The first reason is probably more emotional than anything else. The Indian government announced the banning of not just owning but trading Bitcoin. Some investors were panicked, hence, closing their positions. The second reason, which seems more logical was the liquidation of over $2 billion worth of crypto futures. A total of 178,574 traders had their positions liquidated with a majority of them long (this means that the traders bet that the price of BTC would rise). When markets are experiencing dips and surges, overleveraged positions are closed when traders cannot meet margin calls.
Arguably, other reasons for the dip may include some macroeconomic reasons such as US treasury yields and concerns that the Chinese government may have to step in to keep markets flowing in Asia.
Investors should sit tight and hold their positions. The worst-case scenario is that price falls to $49k. Having said that, things are going to get interesting as the future descends upon us.
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