Green, Green, Red, Green, Green, Green, Red – Well, the aforementioned words ain’t just color names. They’re typically how the king coin’s last 7 candlesticks on the daily chart looked like at press time. Even though Bitcoin [BTC] managed to start its week with strength and striking growth numbers, it hasn’t been able to remain consistent with the same.
In a single day on 4 February, Bitcoin managed to appreciate by 11.42%. However, with fluctuations noted post that, its weekly returns too reflected almost the same value at the time of press.
Over the past 48-hours, Bitcoin’s price come to a point of standstill. It has, yet again, started making horizontal movements, with the candlesticks becoming much shorter when compared to the earlier days of the week.
Thus, with the volatility gradually reducing in the Bitcoin market, the number of liquidations has also started shrinking. Over the past 24-hours, only 150 BTC worth $6.56 million have been wiped off. The said number is way less than the $104 million recorded in the 26-27 January period.
When broken down, it is quite interesting to note that the market had been favorable to longs on 7 February. In effect, the short liquidations that day ended up creating a multi-week low. The next day, the market momentum ended up shifting towards the bears and the number of long liquidations started rising.
Over the past few hours, however, the overall landscape seems to have cooled down, with the number of contracts liquidated starting to recoil.
The drop in the Estimated Leverage Ratio [ELR] has been one of the main reasons why the number of ‘rekt’ contracts has begun grounding. Notably, the subsided ELR is at par with early January’s levels at the moment.
Thus, with traders getting into low-risk trades in the derivatives market, it can be inferred that the leverage flush has already begun and the overheated market is gradually starting to get a hold of itself.
