The recent red candlesticks rangeup to USD 10,000 of difference. Bitcoin reached a new all-time high above USD 58,000.
In recent days, the cryptocurrency market became red as the price of Bitcoin (BTC) had a correction of more than 20%. The pioneering cryptocurrency fell from USD 57,500 to less than USD 45,000 at its lowest point.
Bitcoin had the worst red candlesticks in its history, ranging over USD 10,000 between its highest and lowest points. In one day, the candlestick was still above USD 9,000, according to market data from TradingView.
In a single day, the price of Bitcoin hovered between USD 54,000 and USD 44,845, the latter being its lowest point. Although it rebounded to around USD 47,000, the drop remained more than the previous day.
Those two candlesticks had a greater range than the largest green candlestick in history. On that occasion, the price of Bitcoin rose by more than USD 8,000 in one day, remaining the most profitable day for the cryptocurrency.
The current correction has seen Bitcoin drop by more than 18% from its most recent all-time high above USD 58,000. However, it remains above the price that it reached on February 9th with support above USD 40,000.
More than USD 2,000 Million worth of Bitcoin Are Liquidated in One and a Half Days
Bitcoin maintained a powerful bullish pace for days, so its correction seems to have taken everyone by surprise. In just 36 hours, more than USD 2 billion in long positions in the Bitcoin derivatives market were liquidated, according to data from ByBt.
Since it is a prediction market, the user speculates on positions, predicting price movements in certain time ranges. In this case, the trader risks his capital if the price of Bitcoin contradicts his prediction.
When the crypto asset exceeds a certain price in the opposite direction to what is expected in the position, the risk capital is liquidated in favor of the platform. In recent days, thousands of long positions were liquidated due to the fall of Bitcoin in a short time.
Given that the vast majority of cryptocurrencies have maintained their correlation with Bitcoin’s behavior, they have also fallen considerably. Considering the cryptocurrency derivatives market, the long positions liquidated amount to more than USD 5 billion in just a day and a half.
The first week of January, there was a record of liquidations of bullish positions on Binance. At that time, almost USD 200 million were liquidated on the platform in a period of just 10 minutes. There was recently a liquidation of more than USD 270 million in 15 minutes. In that same period, another USD 177 million were liquidated on the Huobi exchange.
A “Healthy” Correction for Bitcoin
Analysts see this sudden drop as a necessary correction for this Bitcoin bullish cycle. Trader and market analyst Peter Brandt said that a 20% correction “may be enough for the market to be healthy again.”
Additionally, he calculated possible levels of a larger correction, up to 35%. He referred to corrections from last bullish cycle, which culminated in Bitcoin’s all-time high near USD 20,000 in 2017.
Brandt estimated that Bitcoin could finish correcting to about USD 37,938. However, he considered that USD 41,986 could be a good entry price before Bitcoin resumes its bullish trend.
Willy Woo had previously assessed this stage as the consolidation phase of Bitcoin as an asset of USD 1 trillion by market capitalization. The recent correction brought Bitcoin below that level again, but the total bitcoins in circulation could again be worth above USD 1 trillion.
By Alexander Salazar
