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In recent days, Bitcoin (BTC) fell below the $42,000 price range, and if the current downward trend continues, there is a possibility of further decline. The price drop led to a decrease in investor confidence and an increase in long liquidations.
Critical Indicator in Bitcoin
In the last two days, the price of Bitcoin fell below two important thresholds. On December 17th, the daily time chart showed a drop below $42,000. This downward trend has characterized the price movement since it surpassed $40,000. Additionally, at the time of writing, the moving average convergence divergence (MACD) trend turned negative, indicating a potential downtrend.
This observation was consistent with the confirmation provided by the relative strength index (RSI) line around 50. The position of the RSI could indicate a weak upward trend and a potential transition to a downtrend in the short term. Despite the recent price drop, the general sentiment remained positive but was on a downtrend. Also, the funding rate was around 0.010% on December 17th, down from 0.014%.
Coinglass Data on BTC
The funding rate indicated that fewer traders were optimistic about a price increase. Additionally, due to the price drop, more long positions were liquidated than short positions. According to Coinglass, on December 17th, there were over $30 million in liquidations in long positions and over $5 million in short positions. This trend continued at the time of writing. The latest data shows that long positions were liquidated over $29 million, while short positions were around $3 million.
On the other hand, the Bitcoin exchange flow chart reveals recent increases in BTC movements on exchanges. This move could signal a potential sell-off wave that might explain the observed price volatility. At the time of writing, there were indications of a temporary halt in entries and a significant increase in exits. Additionally, more than 2,000 BTC were withdrawn from exchanges.
