Bitcoin opened the month on a bullish note, surging past $10,000, and then the day after, the price of BTC crashed to $9,150 on some exchanges, $9,300 on others and $8,600 on BitMEX.
Bitcoin’s $10k breakout was leverage driven, “OI increased even as liquidations exploded while predicted funding and futures’ basis turned extreme” and “then levered longs got nuked,” resulting in the dump,” said trader and economist Alex Kruger.
BitMEX, however, experienced more buy liquidation than sells while OKEx saw the opposite, more sell liquidation than buys.
Better hold $8,600
As bitcoin dipped back below $10,000, traders were caught on the wrong foot causing the open interest to dip $150 million in minutes on XBTUSD.
Currently trading around $9,600 with 5.2% losses with $2.8 billion “real” volume, the digital currency is exactly where it started the month.
Just like on any particularly volatile day, CME had a “strong” trading session with nearly $800 million in bitcoin futures trading volume. Also, the options activity on the regulated platform continues to see good momentum with July 2020 calls trading in good size, over $40 million.
However, the focus is still mostly on the upside with open interest and volume put/call ratio near one-year lows, as per Skew.
Going forward, holding $8,600 is what matters “lose that and then we might be in trouble,” said trader and investor Josh Rager.
“What an absolute scam that btc dump was, in hindsight the “never seeing btc below 10k again” tweets yesterday should have been writing on the wall,” he added.
Harsh rejection from the red supply zone for the 3rd time since late October 2019
A Weekly close above ~$9,800 would still be fine for Bitcoin
— Rekt Capital (@rektcapital) June 3, 2020
Bitcoin is still up 31% YTD just like the stock market despite the coronavirus pandemic and riots across the USA.
But it is no different from 1968 when 100,000 Americans died from H3N2 flu, a global influenza pandemic that killed 1 million people globally.
“1968 was the year that ‘shattered America’ and many tumultuous events and violence took place in that year. And despite that, the equity markets managed to perform solidly,” wrote Fundstrat’s Tom Lee.
The #GeorgeFloyd protests have had zero affect on the stock market.
Here’s a graph of the Dow Jones index since #GeorgeFlyodMurder. As you can see, it just keeps going up.
The poor are in pain, the country is on fire, but the rich keep getting richer. pic.twitter.com/TYDiy09paS
— Mati Greenspan (tweets are not trading advice) (@MatiGreenspan) June 3, 2020
Amidst this, negative interest rates might also make its way in the US in order to get the economy back to strong growth, according to a St. Louis Federal Reserve economist.
“I found that a combination of aggressive fiscal and monetary policies is necessary for the U.S. to achieve a V-shaped recovery in the level of real GDP,” Yi Wen wrote in a paper.
“Aggressive policy means that the U.S. will need to consider negative interest rates and aggressive government spending, such as spending on infrastructure.”
However, Federal Reserve Chairman Jerome Powell recently said he doesn’t see below-zero policy rates as “an appropriate tool.”
Social unrest, Fed’s money printing, upcoming presidential election, and the prospect of negative interest rates all could work in bitcoin’s favor and push it upwards in the coming years.