Bulls have suffered significant pain from Bitcoin (BTC), and new data has shown just how much.
Glassnode, an on-chain analytics company, tweeted Jan. 10 that people who are looking for BTC have suffered a repeat of May last year when BTC/USD fell to $30,000.
Long traders fail “catch the blade”
Glassnode’s Longs Liquidations dominance metric shows that the “majority of liquidations” in the new year were longs.
It is not surprising, considering Bitcoin’s overall trend since November. However, the losses have put the past weeks on par with May in terms longs vs shorts.
Researchers commented that the Bitcoin long liquidation dominance had reached 69%, which is the highest level since the May 20,21 deleveraging event.
“This indicates that most liquidations in the futures markets during recent weeks were caused by long traders trying to catch the knife.”
Bitcoin futures long liquidations dominance annotated chart. Source: Glassnode/Twitter
The data shows that the time period between late July and late November was marked by the opposite trend, with shorters being the victims of an unexpected bull market multiple times.
Long liquidation spikes don’t always signal local price bottoms but the desire for quick turnarounds has been long-standing.
Related: “Most bullish macro background in 75 years” — 5 things you should be watching in Bitcoin this week
Cointelegraph reported that Bitcoin is “oversold” according to historical standards at current prices.
“If we bounce, I’m doubtful we won’t reconsider these prices but some short-term relief is nice,” Benjamin Cowen, quant analyst, tweeted Saturday in intraday observations.
“Daily RSI” is technically also overpriced, $40k-$42k theoretically is a support area.
Cowen was commenting about the Crypto Fear & Greed Index which reached rare lows at 10/100 last weekend. This indicates “extreme fear” among market participants.
The $BTC oversold indicator has been seen only four times since the bottom in 2018’s depression. These records were broken not long after #Bitcoin surged by 340%, 17% 1585%, and 141% respectively. Full details: https://t.co/qtlKY9tQzS pic.twitter.com/oSpb3fTjKX
— CRYPTOBTCIRB (@crypto_birb January 8, 2022
These occurrences are usually followed by a price or sentiment recovery. However, current lows can be quite poignant as the price level of one year ago was accompanied with the opposite phenomenon, 93/100, or “extreme greed”.