BTC price drops 10% and R$2 billion is lost in the derivatives market

Charlie Taylor

The price of BTC dropped 10% from Thursday to Friday, liquidating many traders, but there are still more bulls than bears in the derivatives market, at a proportion of 4:1.

BTC at -10% and could still fall further

Bitcoin price has been in a downward trend for a few weeks now and from yesterday (Thursday, 05) to today the asset registered more than 10% depreciation, going from ~$39,700 to ~$35,700.

Know more: BTC price could reach as high as $34,000 As we have already brought up in other reviews, it is possible that bitcoin price is heading towards a range between $32,950 and $34,300, which are both possible price support lines that could serve as important impulse point for a possible rally, or return the asset to an accumulation range between $37 and $42 thousand dollars.

graph with bitcoin price and targets as described in the article.Source: TradingView According to Arthur Hayesit is also possible that BTC will be traded again for $30,000.

On-Chain Analysis is indicating bullishness

On-chain reviews, however, are quite positive, and show a pattern of ever-larger record outflows, reaching lower and lower points on the bitcoin reserves chart on exchanges.

Source: CryptoQuant Which shows that there are many whales buying and withdrawing BTC from exchanges, which could even cause a phenomenon called supply shock, with a possible shortage of coins for sale, which would drive the price up.

Analysis of derivatives and settlements

With the last fall, about BRL 2,000,000,000 ($2 billion reais) were lost, with 123,267 traders being liquidated from their positions, which were mostly bulls (with long positions, betting on the price increase).

Settlements of $476.53 million in 24 hours.

This astonishing value is explained by looking at the relationship between bulls and bears in the derivatives market (margin and futures), measured by the index Long/Short Ratio. This index measures how much of the dollar is allocated in long (bulls) positions and how many in short (bears). When the difference is very large, this makes it attractive for many whales (including the exchanges where positions are set up) to carry out an opposite movement in the trading of the asset in cash (in spot), causing these massive liquidations and enhancing the gain of these whales. In recent days, the long/short ratio was above 3.5:1, which means that for every 3.5 positions betting high, 1 was betting low. This ratio is very high and created the perfect opportunity for the $476 million settled in these 24 hours. It has already been observed at other times in history that whenever the L/S Ratio strays too far from 1:1, important moves happen, to bring back market equilibrium. And that’s what happened. We can see from the graph that, during the fall, the L/S Ratio returned to below 2:1, but apparently it was not enough, since the majority of bettors remain “bullish”, causing the ratio to exceed previous values ​​and approach 4:1, which is extremely high.

Source: TheBlockCrypto Taking this into account, it would be possible to see another strong drop, to liquidate these bulls and the market to grow again in a more balanced way, seeking the target of around $33 thousand dollars pointed out in this analysis. *This is not an investment recommendation and all readers are responsible for their own decisions in the market and should carry out their own research and draw their own conclusions.

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