Bitcoin (BTC), which was near $50,000 as traders took stock of recent events, rebounded on Dec. 5.
BTC/USD 1-hour candle charts (Bitstamp). Source: TradingView
Data from Cointelegraph Markets Pro, TradingView. It followed a less volatile Bitcoin/USD as it rose up to $49 777 on Bitstamp and then consolidated.
The pair stabilised after a sharp crash to $41,900 on Saturday. This was in reaction to the latest deleveraging event that hit Bitcoin this year.
The TLDR of last night’s events: Open interest built up over weeks, a regime that allowed positive funding and low weekend liquidity (meaning small order books), created a storm for a long liquidation process. This led to the drawdown as these forced sales were executed into thin books.
— Will Clemente (@WClementeIII) December 4, 2021
Some people felt that there was reason to be cautious and not overlook another set of lows long-term.
“We dip one more time. CT sells more and loses its shit. It miraculously gets purchased,” Lex Moskovski (CIO of Moskovski Capital), predicted in part from comments about Bitcoin’s prospects.
“Consolidation, a slow grinding up.”
The slow grind has plenty of support levels to capture: $50,000 and $1 trillion market cap zone just over $53,000, along with various other all-time highs.
Analyst and fellow trader Rekt Capital also looked at the 200-day exponential moving mean (EMA), a support level that had been in place since August, but was broken by Saturday’s dip as a possible line in the sand.
#BTC is just below the 200-day EMA right now$BTC #Crypto #Bitcoin https://t.co/ZOVwYBjatH pic.twitter.com/vOlJVSEM6p
— Rekt Capital (@rektcapital) December 5, 2021
Rekt Capital also observed a test of 200EMA in September when BTC/USD traded at $42,000. Rekt Capital said that the severity of this dip is still comparatively mild to other historical ones.
“You survived the -84.5% BTC Bear Market. You survived the March 2020 -63% $BTC crash. You survived the May 2021 crash at -53% BTC. He said, “You’ll also survive this crash.”
Is it enough?
The status quo in derivatives markets revealed funding rates that were either slightly positive or neutral at the time of writing. This is a significant difference from days ago.
Related: Ethereum acts like a hedge in Bitcoin price crash when ETH/BTC reaches 3-year high
A large amount of futures open interest was eliminated during deleveraging. Additionally, more than $2.5 billion worth of crypto accounts were liquidated.
Commentators were now asking whether enough of this froth was removed to allow for steady growth.
Is there enough open interest? pic.twitter.com/jnvrqRPDot
— Nunya Bizniz (@Pladizow) December 4, 2021
As of now, the weekly close appeared to be Bitcoin’s lowest level since October 1.