With the market in sharp retreat and panic ensuing on social media in the wake of a $1 billion liquidation, all eyes are on Bitcoin’s 50-day moving average. It was only a matter of time before this correction came to pass after weeks of running up the score, says Blockchain Backer, and it could well be what is needed for the next phase.
Major Liquidation Sparks Market Pullback
Monday saw the crypto market take a hard turn as Bitcoin fell to test that 50-day mark. The tumbling prices followed an event that saw $1 billion in liquidations, on top of some $500 million in the days prior. The host of Blockchain Backer would advise not to make too much of it; after a long rally, these things are to be expected and are a sign the market is cooling off naturally.
Many in the trading community were expecting as much given three weeks of uninterrupted growth. “You can have your dramatic price action,” the expert from Blockchain Backer puts it, “but pullbacks of this kind are healthy and will flush out the over-leveraged.”
Investor Sentiment and Social Media Panic
Yet for a technical move to the 50-day moving average, the response on social platforms has been anything but calm. There is a fragility to investor confidence, with traders panicking at the sudden drop, creating what the expert describes as a chasm between public perception and the way the market really is. There is also a tendency in the crypto world to give short-term price action more weight than it deserves, especially when faced with outside threats like quantum computing. In truth, this was no catastrophe, just a liquidation-fueled correction.
Outlook: Recovery Potential and Key Levels
For the future, Blockchain Backer sees the testing of the 50-day as a precursor to recovery. One does not often find better buying opportunities than when confidence is low and large-scale liquidations occur near this indicator. A reclamation of the $85,000 level by Bitcoin would be a telling sign of resilience and that a new rally is in the making. But the host is careful to note the market is still putting itself back together after the recent bottom; what happens from here will depend on a host of other considerations.
This article reflects the channel author’s opinion and is not investment advice.
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Source — Blockchain Backer: https://www.youtube.com/watch?v=Culqik0JsbY
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