Bitcoin price on Sunday fell by nearly 10% reaching sub $54K levels and later recovered up to $57K on Monday before facing another wave of corrections leading to $54K levels again. While many analysts have pointed towards the recent sharp drop in network hashrate due to a power outage in China being the reason for the price drop, others suggest the drop was nothing out of the blue as Bitcoin price has registered a sharp correction up to 25% after every new ATH.
The Sunday price correction led to record liquidation of high-leverage long positions in upward of $4 billion. The liquidation spree started a war of words on the reason behind the sell-off giving rise to the Hashrate FUD, where many analysts claimed the drop of nearly 40% was the main reason behind the price correction, while others pointed towards the fact that power outage happened on April 15 and e even though did record a sharp correction it was only around 15-20% from its ATH.
What's hilarious that hashrate is actually at exactly the same level as when people were saying it's down 40%. There has been no change whatsoever, just statistical inaccuracy connected to the calculation. Still down about 20% from the peakhttps://t.co/hjB3vS8MXS pic.twitter.com/x0vLScvxKe
— Larry Cermak (@lawmaster) April 18, 2021
The other thing concerning about the recent correction was the flat funding rates where a low funding rate indicates a bullish trader behavior, however, despite that Bitcoin market saw one the biggest liquidation in history.
Imo this selling is way overextended. All funding rates went flat and we just flushed like 8bn longs
Either this is the bottom or winter again
— AlgodTrading (@AlgodTrading) April 18, 2021
Is it the Top?
The discussion around bitcoin reaching its potential top started last month, however as soon as BTC bounce back to the new ATH, the narrative change rapidly from bearish to bullish. The supply crunch is still visible as the exchange outflows have continued despite the massive sell-off.
Another thing to note from the price pattern of BTC is the thinning gap between two ATHs with each passing month and growing consolidation period raising concerns over Bitcoin losing its steam and nearing a short-term top. It would be interesting to see if improvement in hashrate would help bitcoin gain some momentum before entering the consolidation phase.