- Bitcoin longs liquidations on BitMEX are becoming highly correlated with the price drops.
- Bitcoin recovery steps above $8,700 but fails to sustain momentum.
For the first time since the rally in June this year, Bitcoin has made a comeback in the $8,000 range. In fact, Bitcoin beat the expectations of the bearish analysts by diving all the way to $8,135. I also had a bearish bias for Bitcoin in the analysis released on Tuesday but I had placed the key support at $9,200. The drop came as expected due to the weak fundamentals but exceeded my expectations and those of others.
The plunge is happening amid massive liquidation of long positions on BitMEX derivatives exchange. The recent liquidation of about $600 million in long positions could have contributed in the revisit towards $8,000. At the time of writing data by Datamish says that $5.9 million in long positions have been liquidated on BitMEX. In the last six hours, $1.2 million shorts position had been liquidated as well. The massive liquidation in long positions is having a very high correlation with the drop in Bitcoin price.
Bitcoin price technical picture
Bitcoin has since pushed for recovery above $8,700 but bulls were unable to sustain the growth from the low levels around $8,135. BTC is dancing at $8,607 following a subtle 0.78% positive correction on the day. Bitcoin’s recovery is likely to be an uphill task especially with the relative strength index stuck around the 30 levels.
The moving average convergence divergence (MACD) is deep in the negative zone. However, reducing bearish divergence signifies rising buying activity. For now, the best that the buyers can do is to defend $8,600 support as they focus on returning above $9,000 in the near-term.
BTC/USD four-hour chart
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