Traders are greeted by a sea of reds Wednesday as the blame shifts to leveraged long traders and the need to liquidate their positions.
Bitcoin (BTC) extended its price drop on Wednesday amid warnings that excessive long positions should be eliminated to allow for further gains.
BTC / USD 1-hour candlestick chart (Bitstamp). Source: Tradingview
BTC price is barely holding on to the $ 56,000 support
Cointelegraph Markets Pro and TradingView showed that BTC / USD reached new local lows of $ 55,760 during trading on Wednesday.
A second day of more substantial losses for the pair came as altcoins also began to reverse their previous successes, with Ether (ETH) dropping below $ 2,000.
A look at the behavior of traders pointed to long positions leveraged instead of the previous spot price, indicating the belief that a larger rally is more likely than another correction. These positions, analyst Filbfilb believes, must be liquidated before Bitcoin can make a meaningful attempt to hit new all-time highs.
The latest price action somehow helped refresh the makeup of the market: $ 2 billion in liquidations in the last 24 hours, $ 600 million of which in just one hour, according to data from monitoring resource Bybt.
“A large flow from a whale wallet went to $ 55,172 on March 23,” Whalemap’s watchdog added, looking at a possible downside.
Let’s see how the price reacts at this level. Usually the price bounces with such strong support. “
BTC / USD chart showing groups of whale orders. Source: Whalemap
Altcoins reverts to strong weekly start
In altcoins, strong performance was in jeopardy at the time of this writing, with Ether again below its all-time marker of $ 2,000 and moving away from all-time highs.
ETH / USD 1-hour candlestick chart (Bitstamp). Source: Tradingview
XRP and Polkadot’s DOT were the biggest losers in the top 10 cryptocurrencies by market capitalization, losing more than 10% on the day. All but one of the top 50 tokens, excluding stablecoins, were in the red.
Commenting, popular trader Scott Melker blamed overly sensitive traders.
“Bitcoin sneezes and drops a few hundred dollars, nervous traders panic about selling their alts like jabronis, and Bitcoin Dominance soars. Good times, ”he tweeted.
“Remember how delicate these altcoin trading windows are.”
The Alts are still ripe for a dramatic return to form in the summer, with Filbfilb even arguing that the second incarnation of “Alt Season” is here.