This is why the Bitcoin price quickly rose to $ 7,300, liquidating $ 90 million




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The price of Bitcoin (BTC) has skyrocketed from $ 6,900 to $ 7,300 on several major cryptocurrency exchanges, this unexpected move liquidating $ 90 million on BitMEX and Bitfinex alone.


Although some traders have predicted the price of Bitcoin will rise sharply after surpassing the resistance of $ 6,900, the sudden jump to BTC's $ 7,300 has caught many analysts off guard.


What happened to Bitcoin?


Bitcoin prices are often susceptible to large price movements, such as the March 12 crash - a time when prices fell to $ 3,600 from $ 8,000 a day.


Bitcoin tends to witness excessive price volatility because the volume is concentrated primarily in the futures market. According to data from Bitwise Asset Management, the 24-hour - verifiable spot volume of Bitcoin is estimated at about $ 1.5 billion.


Meanwhile, the BitMEX derivative exchange alone handled $ 2.9 billion over the past 24 hours, while Binance Futures, OKEx, Huobi, Bybit and Deribit also recorded large volumes on several cryptocurrencies. leading such as Bitcoin and Ethereum.


On futures exchanges, traders often use leverage from 1x to 125x, mainly trading with loans from the exchange. Leveraged transactions make the market more vulnerable to large price volatility, as this results in Long and Short contracts being liquidated in a short time.


Before the price dropped, the majority of traders in the cryptocurrency market were usually Long Bitcoin. On BitMEX, Binance Futures and Bitfinex, about 60% of futures contracts are Long.


The increasing demand for Long began to overwhelm the Short position, forcing traders to buy and adjust their positions. This dominance continues at $ 7,000 and quickly brings the price of BTC to $ 7,300.


Daily chart of BTC / USDT. Source: TradingView
Daily chart of BTC / USDT. Source: TradingView

Famous traders like Flood It has been previously said that Bitcoin's strong rally from the support of $ 5,900 could lead to a new test to a higher resistance level - $ 8,000.


If short liquidation is the main reason, then that is not a discount retest?


If the whole recent price hike was triggered by a series of short liquidations from the low, that would create a solid case for a short-term price retest.


But, since the end of March, the gradual rise in Bitcoin's price from a low of $ 6,000 has been driven largely by increased volume and demand.


In a recent report, U.S. crypto exchange Coinbase reported that retail investors bought a lot of Bitcoin after the collapse to $ 3,600 on March 12.


“Our customers often buy more than they sell in the crash (60%), this figure soared to 67%, taking advantage of market advantages and demonstrating strong demand for electricity assets. even when volatility is strong, ”Coinbase wrote.


A spot market-oriented recovery rally supplemented by short liquidation shows a more optimistic outlook in the short term than just a futures-oriented rally.


The key to sustaining Bitcoin's recent short-term uptrend is keeping the slow pace of growth after performing the initial strong pump up to $ 7,300.


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According to CoinTelegraph
Translated by ToiYeuBitcoin