Bitcoin (BTC) is experiencing a reset in various key metrics as the price drop leads to a reduction in leverage. The BTC/USD 1-hour chart shows that Bitcoin is currently trading around $66,000 after a 5% decrease in just one hour. Despite a 7% decline in April, the retest of support is having a positive effect on the overheated markets.
Interestingly, the recent drop caused a major liquidation event, resulting in a total of $400 million in losses for Bitcoin and altcoins. As a result, funding rates have turned negative, according to data from CoinGlass. This decline in prices and funding rates has been significant, as noted by popular trader Jelle.
QCP Capital, a trading firm, also acknowledged this significant change in the funding landscape in its market updates. It stated that the speed of the drop was due to large liquidations on retail-heavy exchanges, such as Binance. Despite the compression of perp funding rates, the forward curve remains elevated. Spot prices have returned to the 60-72k range.
In terms of technical indicators, Bitcoin’s relative strength index (RSI) readings on daily timeframes have returned to the 50 midpoint. This level is crucial during uptrends and has been a defining characteristic of Bitcoin’s performance since the end of January. It is worth noting that Bitcoin tends to perform best when the RSI is above 70, indicating an “overbought” signal for price.
Turning to volatility, Bollinger Bands on daily timeframes suggest that BTC/USD is entering a pre-breakout phase. Analyst Matthew Hyland compared the current tightening of Bollinger Bands to the levels seen when Bitcoin started its move from $45,000 in February.
It is important to note that this article does not provide investment advice or recommendations. Readers should conduct their own research and make informed decisions when it comes to investments and trading.