Bitcoin (BTC) rallied to close to $ 50,000 on December 5, as traders continued to take stock of recent events.
Data from Cointelegraph Markets Pro and TradingView followed a less volatile BTC / USD as it rose to $ 49,777 on Bitstamp before consolidating.
Fresh off a slide to $ 41,900 early Saturday, the pair leveled off as the market took in what was the latest giant deleveraging event to hit Bitcoin this year.
TLDR of what happened last night:
Open interest being built up for weeks + a regime of positive funding and low weekend liquidity (meaning thin order books) gave a perfect storm for a long liquidation cascade.
These forced sells executed into thin books, thus the drawdown.
– Will Clemente (@WClementeIII) December 4, 2021
The accumulation of open interest for weeks and a positive funding regime and low liquidity over the weekend (meaning that the order books are scarce) created a perfect storm for a long cascade of liquidations.
These forced sales were executed on thin books, hence the reduction.
For some, however, there were many reasons to remain cautious and not rule out another set of long-term lows.
“We dive in one more time. CT loses its shit and sells more. But miraculously it buys,” predicted Lex Moskovski, CIO of Moskovski Capital, in part of comments on the outlook for Bitcoin.
“Consolidation, a slow routine.”
That slow grind now has no shortage of significant support levels to recover – $ 50,000 and the $ 1 trillion market cap zone just above $ 53,000, as well as several previous all-time highs.
Meanwhile, trader and analyst Rekt Capital looked at the 200-day exponential moving average (EMA), a support line that had held since August but was broken in Saturday’s dip, as a potential line in the sand.
#BTC is just below the 200-day EMA right nowUSDBTC #Crypto #Bitcoin https://t.co/ZOVwYBjatH pic.twitter.com/vOlJVSEM6p
– Rekt Capital (@rektcapital) December 5, 2021
BTC is just below the 200-day EMA right now
In late September, when BTC / USD last traded at the $ 42,000 level, it also saw a test of the 200-day EMA, with Rekt Capital noted that the severity of the drop still pales in comparison to previous ones of the history.
“You survived the -84.5% BTC bear market. You survived the -63% BTC crash in March 2020. You survived the -53% BTC crash in May 2021. You will survive this crash too” , added.
Enough money?
A look at the status quo in derivatives markets showed neutral or slightly negative funding rates at the time of writing this article, a marked difference from a few days ago.
A significant portion of the open interest in futures was eliminated during deleveraging, and more than $ 2.5 billion was liquidated in cryptocurrency accounts.
The question for commenters now was whether enough foam had been removed to ensure a stable return to growth.
Open Interest flushed enough? pic.twitter.com/jnvrqRPDot
– Nunya Bizniz (@Pladizow) December 4, 2021
The weekly close, meanwhile, looked like it was going to be Bitcoin’s lowest since early October.