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Bitcoin (BTC) Surges Past $10,100 in an Unexpected Rally, Could This Spell the End of BTC Rangebound Trading?

BTC

The first cryptocurrency by market cap, Bitcoin (BTC) could be said to be on an uptrend in the last five days. Its bullish momentum however extended today as it surged past the $10,000 psychological level to reach as high as $10,150. This rally from its lows of $9,157 however came unexpectedly as seen in BitMEX contracts liquidation worth $74 million.

Bitcoin’s rally may have caught many unawares as it had been in a stretchy consolidation bout since after the May halving. Halving is regarded as a major bullish event by many, but after this event, nothing seemed to happen as Bitcoin traded flat.

Alternative cryptocurrencies otherwise referred to as Altcoins soared on the back of positive sentiment against an underperforming Bitcoin. Many crypto-assets in this category incurred parabolic uptrends while Bitcoin remained stagnated in its range-bound trading.

However, Bitcoin’s story changed in a tide, as in the early hours of today, Bitcoin price surged ahead while major Altcoins, including top-performing DeFi tokens like Aave (LEND), took the downtrend.

This seemed to indicate that the profit traders accrued from recent Altcoin rallies were moved to Bitcoin spurring a rally, while Altcoins took a decline.

Two key drivers seem to have steered this unexpected rally, the liquidation of over-leveraged short contracts and profit taken from Altcoin rallies moved to Bitcoin.

The liquidations took place in a two-wise step: first, when Bitcoin breached the $10,000 psychological level, over-leveraged short contracts were liquidated. When BTC climbed further-reaching $10,150, it caused massive liquidations both longs and shorts to happen, totaling $74 million on BitMEX.

BTC/USD Daily Chart

Bitcoin (BTC) is presently trading at $9,886.

Bitcoin’s Unexpected Rally to $10,150: The End of Bitcoin’s Rangebound Trading?

The range between $10,000 to $10,200 still appears to be a weighty resistance zone as seen in the massive liquidations of contracts.

Bitcoin’s rejection at $10,150 however briefed the rally consequently. $10,000 is noted to have served as a key psychological level for Bitcoin since October 2019.

This recent rally to $10,150 brings Bitcoin quite lower to its February yearly high at $10,473, making it a lower high which might indicate that BTC price has not outrightly broken out of its consolidation bout.

Many Bitcoin proponents notably Peter Brandt, Grayscale CEO Barry Silbert have remained bullish on Bitcoin’s price outlook.

Ki-Young Ju, Crypto Quant CEO, recently stated when the outflow of Bitcoin from exchanges reached a threshold to signal the impending start of a bull run:

“I think the #BTC bull market will start soon. Average Exchange Withdrawals value is going down and about to touch the retail investor-level threshold. Historically, the bull market starts when retail investors become active.”

At the moment, it seems a greater part of the market is on longs as indicated by the BitMEX funding rate of Bitcoin standing at nearly 0.04%. That is a four times increase in the average funding rate of 0.01%.

The funding rate is a small fee paid by one side of the contract to the other (e.g. Longs pay Shorts or vice versa).

A negative funding rate means that shorts pay longs while positive funding rate means that longs pay shorts.

Image Credit: Shutterstock

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