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Bitcoin Eyes Bull Revival as Dip Below $54K Wipes Out Millions More in Leverage
Bitcoin wiped out more excess bullish leverage with a drop below $54,000 early today, and is now looking north.
Updated Sep 14, 2021, 12:27 p.m. Published Mar 16, 2021, 9:47 a.m.
Bitcoin has erased the losses from its latest price dip and could soon see more gains as normalcy returns to the derivatives market.
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Having hit a low of $53,350 during the Asian hours the cryptocurrency is trading 1% higher on the day near $56,200 at press time, according to CoinDesk 20 data. Selling pressure faded near the widely tracked monthly volume-weighted average price (VWAP) of $53,000.
The market now looks ready for a fresh move higher, as the bitcoin perpetual futures funding rate – the cost of holding long positions calculated every eight hours – has dropped sharply from 0.124% to 0.08% after excess bullish leverage was wiped out by the cryptocurrency's pullbacks Monday and Tuesday.
Long trades worth $1.16 billion were liquidated on Monday, the most since Feb. 22, according to data provider Coinalyze. And with today's drop, another $368 million-worth were liquidated by major exchanges.
With the lower funding rate, a more sustained move toward record highs could be seen – more so, as global stocks continue to rally with risk sentiment being supported by fundamentals, according to a tweet from Holger Zschaepitz, a markets commentator and economics author.
Further, many U.S. citizens scheduled to receive $1,400 stimulus checks this week could invest part of the cash received into bitcoin, boosting its price. As per a Mizuho Securities survey, nearly $40 billion of the latest round of stimulus checks could be spent on bitcoin and stock purchases.
Technical charts are also suggesting scope for a price bounce.
The 14-hour relative strength index (RSI), a momentum indicator, formed a higher low early today, decoupling from the downtrend in prices. That "bullish divergence" indicates the pullback has run out of steam.
Also read: Diginex Anticipating Bitcoin Rise to $175K by End of 2021: CEO
That said, fresh chart-driven selling may be seen if the cryptocurrency drops below the monthly VWAP support at $53,000.
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