Bitcoin (BTC) price has yet to recapture the $40,000 level and traders who were expecting a quick resumption of the uptrend may have been caught off guard by the recent pullback. This could have led to the liquidation of about $500 million worth of cryptocurrency futures positions in the past 24 hours.
Over leveraged positions provide the necessary ammunition during the uptrend, but they become a liability when the trend reaches an inflection point.
When the markets turn down, leveraged long positions quickly turn into a loss, resulting in margin calls from brokers. When the margin requirements are not met, the brokers dump the positions at market price, leading to a sharp plunge.
Therefore, data indicating a reduction in leveraged Bitcoin positions in the past few days is a positive sign as it decreases the risk of cascading liquidati.
While a sharp fall is usually avoided when the markets are not overleveraged, sustained buying is needed to maintain the higher levels. If that does not happen, the price continues to correct gradually.
Grayscale Investments has been one of the major buyers in the past few months but they now have a new competitor, Osprey Funds, which began quoting in the over-the-counter market on Jan. 15 under the ticker symbol OBTC. The firm is offering a competitive management fee structure compared to Grayscale.
This is a positive sign for crypto markets because if both these firms attract institutional investors, the buying may resume and Bitcoin can reverse course to pursue new highs.
While Bitcoin remains stuck in a range, select altcoins are running hard. Let’s study the charts of the top-5 cryptocurrencies that may be favored by the bulls in the next few days.
Bitcoin is currently consolidating in an uptrend. The price action of the past few days has formed a symmetrical triangle, which generally acts as a continuation pattern. The long tail on today’s candlestick shows the bulls are…