BTC Sudden Crash: What the Metrics Say

 

Bitcoin is posting slight gains this Monday morning after a weekend of declines.

Last week saw history being made as the Securities and Exchange Commission (U.S. SEC) finally approved Bitcoin spot exchange-traded funds (ETFs) on January 10th.

Right after the first trading day kicked off on January 11th, BTC’s performance significantly rallied to a level not seen in a while: the $49,000 mark.

The first day, January 11th, recorded trading worth as much as $4.6 billion.

• Grayscale’s GBTC ($2.3 billion) and BlackRock’s IBIT ($1 billion) led the set of 11 asset managers on the charts on Thursday.

The second day, January 12th, was only slightly modest, with trading worth $3.1 billion taking place.

• BlackRock ($564 million) and Fidelity ($431 million) led the rally on the second day.

 

Source: Yahoo Finance

However, despite the huge hype going around in the markets, the king coin failed at sustaining this rally, with the price dramatically dropping to as low as $41k.

Most short-term traders chose to capitalise on the anticipation of the ETF approvals and decided to quickly exit the market after taking profits.

Bitcoin positions worth over $90 million were liquidated as the frenzy over ETFs subsided.

• $76 million in long positions,
• $14 million in short positions were liquidated during the period.

The decline in BTC’s value erased all the gains it had achieved since the beginning of this year.

Given the metrics, we can conclude that the launch can be viewed as a mixed bag:

• The approval certainly gave a much-needed validation to the cryptocurrency in the traditional market.
• Most traders seemed to be more interested in making short-term profits, much to the chagrin of crypto enthusiasts.

With BTC currently trading at $42,668, a break below $41,000 would correspond to a break below the trend line, which would send a negative signal, with $40,000 as the next target.
 

 

Source: BTC/USD, BitDelta/TradingView

On the upside, the $45,000 area is the first major hurdle, before last week's peak at $48,750 and then the key $50,000 threshold.