Bitcoin price BTC price has fallen sharply and recorded large losses. Bitcoin price has been losing value rapidly. This is also known as a BTC dump.
The recent rapid Bitcoin price crash has taken its toll. Almost $1 billion worth of BTC futures contracts were wiped out once again. But was this already the end of the correction or just the beginning?
Nearly $1 billion worth of Bitcoin Evolution futures contracts were liquidated today, January 13.
Chart of liquidations of BTC futures positions.
Total bitcoin liquidations.
The continuous loop of liquidations causes extreme volatility and large price fluctuations in the cryptocurrency market and most importantly in the Bitcoin price itself. For example, just yesterday $410 million of long BTC positions were liquidated on Binance. That was the highest daily value of liquidated futures contracts to date.
Why this is all pretty normal for Bitcoin
The Bitcoin price crash came pretty quickly and violently. Within a very short period of time, the price per BTC dropped by over -26%.
In the wake of a parabolic rise in Bitcoin price, which reached new record prices of over $41,000, public attention around BTC increased noticeably and attracted many new investors to the market. Such are often shocked by the volatility of the Bitcoin price and are afraid of having bought the top of a bubble again.
However, if we look at the bull run in 2017, we can see that such and larger price corrections are completely normal even in an uptrend for Bitcoin.
Bitcoin price corrections during the bull run in 2017
The chart shows that during the bull run in 2017, there were a total of 9 price corrections ranging from -25% to -42%. This means that the current price correction of around -26% is still at the lower end of what we are used to seeing from the Bitcoin price.
Bitcoin price correction could continue
Not a few see the current correction as completed. For example, the pseudonymous trader known as „Byzantine General“ has noted that the $30,000 area has become a significant support level.
30k is pretty significant support, I don’t think it’s going to give out just yet.$BTC pic.twitter.com/ddThmeXSAK
– Byzantine General (@ByzGeneral) January 13, 2021
As a result, many are interpreting the cooling of the bitcoin futures market while consolidating the $30,000 area as a very bullish sign for the bitcoin price and its medium-term prospects.
But there are also signs that this is only the halfway point of a larger correction. For example, many fear that a head-and-shoulders formation could form on the BTC chart as the Bitcoin price drops again.
The head and shoulders scenario for the BTC price
Head and shoulders formation drawn on the BTC chart with a minimum price target.
Possible head and shoulders formation on the BTC/USD chart.
In order for a reversal pattern in the form of a head-and-shoulders formation to form at all, the Bitcoin price would first have to close well below the $32,800 level. Only from this point, the formation is considered confirmed and a continuation of the correction is likely.
A minimum price target of around $22,000 would be derived from a formed head-and-shoulders formation. This would correspond to a further correction of -36% to the current Bitcoin price. However, according to the Encyclopedia of Chart Patterns by Thomas N. Bulkovski, this price target is reached only 63% of the time. The average decline is 23%, although statistically, the most likely decline is 15%. The latter would correspond to a correction to just under $28,000.
Bitcoin price uncertainty creates opportunities
Uncertainty about what will happen next for the Bitcoin price from the current level sometimes creates the current volatility in the market. Volatility is exactly what experienced traders look for as it creates opportunities for lucrative profits.
Current Bybit promotion for new depositors
Futures exchange Bybit is currently promoting a bonus of up to $520 on deposits for new users of the platform. Here is an overview for the reward measured by the amount of the deposit:
- ≥ 0.01 BTC = $15
- ≥ 0.05 BTC = $50
- ≥ 0.1 BTC = $100
- ≥ 0.5 BTC = $300
- ≥ 1.5 BTC = $500
Regardless of the deposit amount, every new user will also receive a $20 coupon as a gift. This promotion is valid only until February 5, 2021.
However, trading with leverage is only suitable for experienced traders. The above example of the article shows that many investors can lose a lot of money due to abrupt Bitcoin price fluctuations.