[ad_1]
Bitcoin yet again faces strong resistance at $10,200 levels as whales start liquidating their long positions resulting in a steep sell-off. Nearly, $200 billion BTC was sold in just an hour’s time. Now BTC is trading around $8,600.
Bitcoin made a strong recovery over the last 50 days since its price crashing to 2020-low around $5000 levels in mid-March. Last Friday, May 8, Bitcoin price reached close to $10,000 levels, as investors rushed to buy BTC before halving. But now we can observe Bitcoin price falls, one after another, let’s try to understand why it happens. The much-awaited Bitcoin halving will happen on May 12 i.e. tomorrow, reducing the miner rewards to half from 12.5 BTC to 6.25 BTC post-halving.
However, just before the halving, BTC failed to cross the $10,000 barrier and rather witnessed a sell-off sinking again below $9000. On Sunday, May 10, just two days before halving, the BTC price tanked 10% slipping close to $8600 levels. At press time, BTC is trading at a price of $8627 with a market cap of $159 billion.
Bitcoin witnessed yet again massive volatility on Sunday as investors liquidated nearly $200 million of their long positions. So let’s take a look at some of the possible reasons for BTC to correct before halving.
Massive Volatility on Bitcoin Derivatives Platform as One Reason Why BTC Falls
Just before the Bitcoin halving, the trading activity surged significantly on all major crypto trading platforms. Especially, the platforms trading Bitcoin derivative products witnessed a massive trading surge.
The Deribit options contracts registered its all-time-high volume while CME registered record-high open-interest. On the other hand, the spot exchanges saw volumes going as high as the 2017 levels in the last three weeks.
Historically, Bitcoin halving draws a lot of investor interest before the actual event. As many new investors join the race for BTC purchase, it opens up an opportunity of steep sell-off for the traders. even before the 2016-halving, BTC price tanked 30% as part of wider selling on the market enthusiasm.
Whales Sell BTC As It Struggles to Cross $10,000
Since Bitcoin was struggling to cross its major resistance of $10,200 levels, the whales majorly started short-selling Bitcoins across all major cryptocurrency exchanges. The cumulative open interest for Bitcoin, of the four biggest derivatives exchanges crashed significantly.
The open-interest is basically the total number of long and short contracts open at any given period of time. The declining open interest means that there was a huge selling pressure.
Another metric called ‘funding rate’ also turned negative for on Bybit, Binance Futures and BitMEX. The funding rate going negative when BTC price if falling shows that a huge majority of the market is holding its short positions. This means the overall sentiment is negative and Bitcoin is likely to fall further.
Bitcoin Facing a Multi-Year Strong Resistance
Historically, the range between $10,200-$10,500 has been a strong range of resistance for Bitcoin. If Bitcoin manages to break this, it can quickly escalate to new highs from there onwards.
Last year in June 2019, after Bitcoin breached the $10,500 levels for the first time, it quickly jumped to $14,000 levels. However, in the last two years, Bitcoin has failed to cross these levels in five out of six attempts.
As Bitcoin struggled yet again to cross $10,200 levels, whales started liquidating their long contracts on BitMEX and Binance Futures.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
[ad_2]
Source link
