Bitcoin (BTC) is experiencing a reset in various important metrics as the price drop of BTC leads to the elimination of leverage.
The BTC/USD 1-hour chart from TradingView shows that Bitcoin is currently hovering around $66,000 after a 5% decrease in a single hourly candle.
Despite a 7% decline in April, the retest of support is already having a purging effect on overheated markets. A major liquidation event occurred, totaling $400 million for Bitcoin and altcoins combined, according to data from CoinGlass.
As a result, funding rates started to turn negative, causing prices to drop. This change in the funding landscape was acknowledged by trading firm QCP Capital in its “Asia Morning Color” market updates. QCP Capital noted that the speed of the move was due to large liquidations on exchanges like Binance, resulting in perp funding rates going from as high as 77% to flat. The move brought spot prices back into the range of $60,000 to $72,000.
While perp funding has decreased, the rest of the forward curve remains elevated, according to QCP Capital.
On the daily timeframes, Bitcoin’s relative strength index (RSI) readings have returned to the 50 midpoint. This level is important during uptrends and has been a characteristic of Bitcoin’s performance since the end of January. Bitcoin tends to perform strongly when its RSI is above 70, indicating an “overbought” signal for price.
In terms of volatility, the Bollinger Bands on daily timeframes are suggesting a new pre-breakout phase for BTC/USD. Analyst Matthew Hyland compared this to the situation in February, stating that the daily Bollinger Bands are tightening to levels not seen since the price movement from $45,000.
It’s important to note that this article does not provide investment advice or recommendations. Readers should conduct their own research before making any investment or trading decisions.