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 nights 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 Bitcoins 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 $53,000, along with various other all-time highs.
Analyst and fellow trader Rekt Capital also looked at the 200-day exponential moving mean (EMA), a support level that had been in place since August, but was broken by Saturdays dip as a possible line in the sand.
#BTC is just below the 200-day EMA right now$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, “Youll 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 Bitcoins lowest level since October 1.