After a series of days stuck under the $30K line, Bitcoin has finally shown a clear trend, though it’s not the one bulls were hoping for. Bitcoin slipped below its monthly support of $29K, and it didn’t stop there, continuing to slide down to the $28.8K mark. This severe bearish swing led to a massive market liquidation today. However, analysts are viewing this as a prime opportunity to go long on Bitcoin’s price, with the aim of pushing it back up to $30K.
Bitcoin Records Massive Liquidation
Bitcoin experienced a drop today following a report by the Wall Street Journal that Binance’s CEO, Changpeng “CZ” Zhao, allegedly indicated in a private discussion that the cryptocurrency exchange’s affiliates had engaged in wash trading a few years back. Additionally, warnings from Chinese policymakers about a challenging economic recovery, without the promise of substantial stimulus, also contributed to the decline.
Moreover, Bitcoin took the spotlight as funds tracking BTC reported outflows amounting to $13M. Meanwhile, products shorting Bitcoin continued to see outflows for the 13th consecutive week, totalling $5.5M. According to a report by CoinShares today, investors are beginning to prefer Ethereum over Bitcoin, as evidenced by the $6.6M of inflows into Ethereum.
According to Coinglass’s total liquidation chart, there was a significant surge today following the drop in BTC price to $29K. Both short and call holders experienced heavy liquidations, but long positions were the most affected, with the total amount surpassing $41 million.
Conversely, put positions experienced a minor decrease in liquidation to $3 million. However, it’s worth noting that sellers had previously liquidated $10 million worth of holdings profitably when the BTC price nearly reached $30.1K.
What’s Next For BTC Price?
Bitcoin has been consistently trading below the 20-day exponential moving average and created more distance today by dropping below the $29.5K level. However, a silver lining is that the bears failed to drive the price below $28,700.
This indicates that the bulls are still in the game, purchasing at every slight drop. The bears’ repeated inability to drag the BTC price lower could potentially draw in buyers.
If the price surpasses the 20-day EMA, it might surge toward the immediate resistance at $30,200. A breakthrough above the $30,500 zone could pave the way for a potential rally to $31,800.
Conversely, if the price drops and falls below $28.3K, it would signal a spike in bearish confidence. The price could then tumble toward the support level of $26,700.
The moving averages on the four-hour chart are declining, and the relative strength index (RSI) has dropped to the overselling region, suggesting that the price may continue to witness volatility.