Bitcoin (BTC) staged a sharp rally above $106,000, reversed the course and dumped it to nearly $103,000, avoiding both bulls and bears, and liquidating over $600 million Crypto derivative positions.
The movement began on Sunday around 9pm. Bitcoin has surged over $2,500 in less than an hour. This is a pattern that stems from thin liquidity over the weekend and potential algorithm purchases triggered at the technical level.
Bitcoin price action. (Coingecko)
Such price action followed a short textbook slash, or stopped aggressively. A short aperture occurs when traders betting on a price (short seller) are forced to raise assets and buy, and the price is even higher and often quickly pushed up to cover losses.
The sudden move has wiped out over $460 million with its strengths tracking futures tracking majors such as Ether (ETH), Solana (SOL) and Dogecoin (Doge), and $220 million with shorts.
Liquidation waves were notable when they occur during traditionally quiet weekend times. This is a rare event that forces major players to sell or buy activities.
Prices for SOL, DOGE and XRP have fallen by more than 4% in the last 24 hours, and data shows that the wider Coindesk (CD20) has dropped by more than 2%.
Volatility follows a week of macro uncertainty, with Moody cutting US credit ratings on Friday, and inflation fears resurface after mixing economic data. The downgrade caused the US Treasury to violate 5% in 30 years.
Crypto has benefited widely from the updated institutional influx and the momentum of Spot ETFs, but as reported, traders continue to be cautious at current price levels.
Bitcoin has been flat over the past week, but could show short-term resistance as it has failed to exceed $106,000 recently (at a critical psychological and technical level), FXPro's Alex Kuptsikevich told Coindesk last week.
Meanwhile, some traders expect higher volatility in a few days when it becomes a warning sign for those looking to take advantage of their bets.
Haiyang Ru, co-CEO of Hashkey Business Group, said, “Investors are shifting capital to Bitcoin.
“Bitcoin, however, floats just below the new highs, but we expect more market volatility as traders prepare for new trade transactions and final versions of fiscal policy,” Ru added.
Read more: 5% breach of 30-year Treasury yield amid downgrade of Moody's rating, financial concerns
