{"id":152187,"date":"2021-01-12T02:09:20","date_gmt":"2021-01-11T23:09:20","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/hold-your-horses-9k-bitcoin-price-drop-not-a-trend-change-data-says\/"},"modified":"2021-01-12T02:09:20","modified_gmt":"2021-01-11T23:09:20","slug":"hold-your-horses-9k-bitcoin-price-drop-not-a-trend-change-data-says","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/hold-your-horses-9k-bitcoin-price-drop-not-a-trend-change-data-says\/","title":{"rendered":"# Hold your horses! $9K Bitcoin price drop not a trend change, data says"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3dcb5d5b347\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3dcb5d5b347\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/hold-your-horses-9k-bitcoin-price-drop-not-a-trend-change-data-says\/#OKEx_top_traders_bought_the_top\" >OKEx top traders bought the top<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/hold-your-horses-9k-bitcoin-price-drop-not-a-trend-change-data-says\/#Bitfinex_traders_were_also_caught_by_surprise\" >Bitfinex traders were also caught by surprise<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/hold-your-horses-9k-bitcoin-price-drop-not-a-trend-change-data-says\/#20_of_crashes_are_the_norm_rather_than_exception\" >20% of crashes are the norm rather than exception<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># Hold your horses! $9K Bitcoin price drop not a trend change, data says <\/strong>&#8221;<\/p>\n<div class=\"post-content\" data-v-5a136f3a>After Bitcoin (BTC) price flirted with a $42,000 all-time high on Jan. 8, it stabilized in a tightening range between $39,000 to $41,500 for two days and the pennant structure on the shorter-term timeframes hinted that a breakout to $45,000 was a possibility.\u00a0<\/p>\n<p>This all changed quite suddenly Jan. 10 as the $39,000 support failed to hold and Bitcoin price entered a steep correction.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2021-01\/8b14dd66-8971-4b2e-aa85-f5d2c5fb0d2d.png\"><figcaption style=\"text-align: center;\"><em>BTC\/USD 4-hour chart. Source: TradingView<\/em><\/figcaption><\/figure>\n<p>A swirling and cruel 26.6% drop took BTC down to $30,100 over the next 30 hours and $1.5 billion in cascading liquidations at derivatives exchanges boosted the correction. Interestingly, this occurred just as the open interest on BTC futures reached a $12.7 billion all-time high.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2021-01\/7ebe0739-eb98-48ec-9a1b-74918593d012.png\"><figcaption style=\"text-align: center;\"><em>Derivatives exchanges BTC futures open interest in USD. Source: Bybt.com<\/em><\/figcaption><\/figure>\n<p>Today\u2019s price action presents a story of doom, gloom and liquidations, but what it fails to mention is that the Bitcoin price crashed by 20.4% just one week ago as it tested sub $28,000 levels. <\/p>\n<p>During that similar price event, a total of $1.2 billion in long contracts were liquidated, so the price action of today isn\u2019t so different from what the market experienced just a week ago on Jan. 11.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2021-01\/5b141fa4-8c7d-44d8-9e3e-75f37af17b7c.png\"><figcaption style=\"text-align: center;\"><em>BTC\/USD 4-hour chart. Source: TradingView<\/em><\/figcaption><\/figure>\n<p>As the chart above shows, BTC bounced back by 11% one hour after dropping below the $28,000 level. What might have surprised traders this time around is the 13% bounce from $32,200 to $36,400 which created a false bottom.<\/p>\n<p>To understand if that&#8217;s the case, one should analyze crypto exchanges&#8217; top traders long-to-short ratio and hourly liquidations.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"OKEx_top_traders_bought_the_top\"><\/span>OKEx top traders bought the top<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Exchange-provided data highlights traders&#8217; long-to-short net positioning. By analyzing every client&#8217;s position on the spot, perpetual and futures contracts, one can obtain a clearer view of whether professional traders are leaning bullish or bearish. <\/p>\n<p>With this said, there are occasional discrepancies in the methodologies between different exchanges, so viewers should monitor changes instead of absolute figures.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2021-01\/864c930d-7b88-47a8-a42d-4fa85fddeea7.png\"><figcaption style=\"text-align: center;\"><em>Top traders BTC long\/short ratio. Source: Bybt.com<\/em><\/figcaption><\/figure>\n<p>The top traders at Binance averaged a 23% position that favored longs over the past 30 days. This wasn&#8217;t the case on Jan. 7, when they started adding long positions until reaching a 59% peak in the early hours of Jan. 10. <\/p>\n<p>This move took place as BTC broke the $37,000 resistance and paved its way to $41,500. Therefore, Binance top traders have been mostly reacting after each BTC price move instead of trying to anticipate it.<\/p>\n<p>On the other hand, top traders at Huobi averaged a 0.91 long-to-short ratio over the last 30 days, thus favoring net shorts by 9%. From Jan. 8 to the early hours of Jan. 10, these traders had been increasing their shorts, hence profit-taking as BTC failed to break the $42,000 level. <\/p>\n<p>This trend reverted as BTC lost the $39,000 support, and Huobi\u2019s top traders reduced their 28% net short to 4% in an attempt to catch the bottom.<\/p>\n<p>Lastly, OKEx top traders have been adding long positions, driving the indicator from 1.00 (flat) in the early hours of Jan. 8 to a 1.79 ratio favoring longs in the early hours of Jan. 11. <\/p>\n<p>These traders bought the top and were the ones who were heavily liquidated as the BTC price crashed by 26%. Their long to short ratio hit 1.00 (flat) again just as BTC hit $34,000 on Jan. 11.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Bitfinex_traders_were_also_caught_by_surprise\"><\/span>Bitfinex traders were also caught by surprise<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Bitfinex gathers weekly data on top traders&#8217; profit and loss, although it is possible for users to &#8216;opt-out&#8217; from this ranking. Over the past 24 hours, the bottom 10 lost a combined $153.3 million.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2021-01\/4182b76c-72ff-4224-8e8e-8bbc0d854e70.png\"><figcaption style=\"text-align: center;\"><em>Bitfinex top traders weekly profit &amp; loss. Source: Bitfinex<\/em><\/figcaption><\/figure>\n<p>Relevant losses during a surprise crash should not mean that Bitfinex traders got it all wrong. Some traders might have been ill-positioned, but overall they have been profit-taking during the rally. As of now, Bitfinex traders are back to a &#8216;neutral&#8217; position according to its historical levels.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2021-01\/9e6048ac-afa8-4c14-9ee8-9e5604947415.png\"><figcaption style=\"text-align: center;\"><em>Bitfinex BTC long to short ratio (blue) vs BTC price (orange). Source: Bitfinex<\/em><\/figcaption><\/figure>\n<p>Exchange-provided data shows that Bitfinex\u2019s long-to-short ratio increased from 2 to 9, favoring longs between Nov. 25 and Dec. 21. <\/p>\n<p>To put things in perspective, its 6-month moving average stands at 6, leaning toward longs. Thus, considering its leverage data from margin products, these traders have been surprisingly profitable.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"20_of_crashes_are_the_norm_rather_than_exception\"><\/span>20% of crashes are the norm rather than exception<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>It\u2019s also important to consider that Bitcoin holds a 3.75% daily average volatility. Therefore, these large corrections should be expected. <\/p>\n<p>Bitcoin faced a 50% intraday decline on Mar. 12, 2020, yet for those patient enough to hold through those bearish periods, an 11x rally followed as the cryptocurrency hiked from $3,600 to almost $42,000. <\/p>\n<p><em>The views and opinions expressed here are solely those of the <\/em><a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/noshitcoins\"><em>autho<\/em><em>r<\/em><\/a><em> and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.<\/em><\/p>\n<p><template data-name=\"subscription_form\" data-type=\"markets_outlook\"><\/template><\/div>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. 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