Bitcoin (BTC) has caused cops significant pain in the past few weeks, and new data now shows how much.
In a January 10 tweet, on-chain analytics firm Glassnode revealed that those yearning BTC had suffered a recurrence last May when BTC / USD started falling towards USD 30,000.
Long traders cannot “catch the knife”
According to Glassnode’s Longs Liquidations Dominance metric, the “majority” of liquidations in the new year were longs.
This isn’t surprising given the overall performance of Bitcoin since late November, but the magnitude of the losses has brought the last few weeks to the level of corn in terms of longs vs. shorts.
“The dominance of the Bitcoin long liquidation has reached 69%, the highest level since the deleveraging event in May 2021,” commented researchers.
“This means that the majority of the liquidations in the futures markets in the past few weeks have been long traders trying to catch the knife.”Annotated diagram of the dominance dominance of Bitcoin futures with long liquidations. Source: Glassnode / Twitter
Looking at the data, the period from late July to late November showed the opposite trend shape, with shorts falling victim to an unexpected bull run several times.
Unusual lows
While long liquidation peaks do not always mark local price lows, the appetite for a trend reversal in short periods of time has long been loud.
Related: “The Most Bullish Macro Background In 75 Years” – 5 Things To Watch For Bitcoin This Week
Bitcoin, as a Cointelegraph reported, is firmly “oversold” in historical comparison with current prices.
“If we recover here, I’m not convinced we won’t check these prices again, but some short-term relief would be nice,” says quant analyst Benjamin Cowen tweeted Saturday as part of intraday observations.
“The daily RSI is also technically oversold, with $ 40,000 to $ 42,000 theoretically also an area of support.”
Cowen commented on that Crypto Fear and Greed Index, which hit rare lows of just 10/100 over the weekend, suggesting “extreme fear” among market participants.
Since bottoming out in the depths of the 2018 Depression, $ BTC has only seen these oversold indicators four times at 3k, 10k, 4k and 30k. Not long after these records were hit #Bitcoin increased by 340%, 17%, 1585%, 141%, respectively. All the details: https://t.co/qtlKY9tQzS pic.twitter.com/oSpb3fTjKX
– CRYPTO₿IRB (@crypto_birb) January 8, 2022
Such events are usually followed by price and sentiment rallies, but the current lows are poignant as the same price level a year ago was accompanied by the opposite phenomenon – 93/100 or “extreme greed”.
