Bitcoin [BTC] price logs another flash of volatility, however, this time to the opposite side. Hours back, around 11: 00 hours UTC Bitcoin exhibited a volatility of over $300 with an instantaneous dump, followed by a buy back.
The price dropped to a low around $7052, but a bullish engulfing channel pushed it back to testing the 50-period EMA above $7200.
This could possibly be the effect of holiday trading which induces high volatility in times of low volumes. Mati Greenspan, notes in his daily mailer,
When things aren’t moving you can’t make money, but even when they do start to move they tend to move too quickly.
Moreover, the volume is not as low as one might think. According to skew data, the volume is at par with the last couple of weeks.
The price move also caused massive long liquidations on BitMEX, Okex, and Huobi. On Huobi, the market has been witnessing long liquidations since 24th December as the market’s inclination is growing towards the short site.
Furthermore, on Okex, the long/short ratio rocked between the bulls and the bears as the volatility lasted. The Open Interest in Bitcoin also saw a flash drop during the price drop. The drop in price could indicate long liquidations on Okex as well.
However, the both the OI and long/short ratio have recovered since then, while the funding rate on the hourly is positive as well.
On BitMEX, the move caused a long liquidation of worth $8.6 million. The funding rate of BitMEX in the past three hours has been negative.
Furthermore, Being the last day of trading expiry of the futures contracts on CME, the volume of December contracts dropped while the January contracts volume skyrocketed.
A daily close price action is beginning to squeeze the Bollinger Bands, as it looks like Bitcoin will log another Doji on the daily scale. The price of Bitcoin at 15: 00 hours UTC on 27th December is $7173, the daily opening was at $7195.
Do you think Bitcoin long liquidations will lead to a drop? Please share your views with us.
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Nivesh from Engineering Background is a full-time Crypto Analyst at Coingape. He is an atheist who believes in love and cultural diversity. He believes that Cryptocurrency is a necessity to deter corruption. He holds small amounts of cryptocurrencies. Faith and fear are two sides of the same coin. Follow him on Twitter at @nivishoes or mail him at nivesh(at)coingape.com