Bitcoin (BTC) has had a great week so far as it has been slowly moving towards reclaiming its all-time high. Prices for the number one asset has been rallying upward, but the resistance near the $11,800 – $12,000 has been a tough one for the bulls to overcome.
The cryptocurrency took traders by surprise on its way to $12,000, as the price of BTC crashed almost 12% in just 6 minutes with more than $1 billion futures positions getting liquidated in an instant.
The 12k region has always been acting a crucial resistance for BTC. The last time the token surpassed this region was back in August 2019, following which the price fell down to $7,000 as a descending triangle broke down.
This time, a massive red candle showed up as BTC went from its local high at $12,071, down to as low as $10,550.
Data from crypto market analysis firm Bybt claims that more than 72,422 people were liquidated in the last 24 hours. BitMEX’s Bitcoin perpetual swap saw the largest single liquidation order for $10 million.
Meanwhile, BTC was swift enough to recover back to the $11,200 region, hinting that bulls are still in control. Following this, Morgan Creek co-founder Anthony Pompliano tweeted that the asset isn’t “for the faint of heart”:
The break above $11,500 was a crucial move according to several analysts, and many of them have also said that if Bitcoin breaks above $12,000, the path to its all-time high at $20,000 would have little resistance.
However, prominent crypto analyst Michael van de Poppe had noted in an analysis that the $11,500-11,800 resistance area is an important resistance range for BTC, which the token broke through before the surprising crash.
According to Poppe, once “the price of Bitcoin breaks through this zone, then there is a lot of open range above and a new bull market will be upon us.”
For now, it feels like buyers were extremely overleveraged on the rally, as they presumably assumed this was a full-blown market.
Also, the weekends tend to experience a drop in liquidity as the number of active traders is few. As a result, lower volume leads to massive price movements.
A single big liquidation often triggers an avalanche of liquidations. For example, when a long contract gets liquidated, buyers are forced to market sell, which creates selling pressure.
As long as BTC manages to recover back above $11,500 and stays above the support at $10,800, the uptrend is expected to maintain momentum.
At the time of writing Bitcoin is trading at $11,278 and is down 3.4% on the daily.