Carnage thanks to a disproved scare over Mt. Gox bitcoins destroys large amounts of BTC open interest and trading positions in hours.
Bitcoin (BTC) returned to a familiar range on April 27 as panic over alleged Mt. Gox and United States government transactions faded.
“Rough” price action keeps Bitcoin traders cautious
Snap volatility had kicked in following the Wall Street open as bulls’ trip to $30,000 was rudely interrupted by fears that BTC from wallets controlled by the U.S. government and entities related to defunct exchange Mt. Gox were on the move.
As Cointelegraph reported, the claims turned out to be false, but not before wiping a large slice of open interest from derivatives markets and sending BTC/USD down 7%.
A subsequent recovery returned the pair to $29,500 before consolidation kicked in.
Reacting, popular trader Jelle called on Twitter followers to filter out short-timeframe curveballs.
“Bitcoin higher timeframe direction is clear – everything else in the meantime is noise,” he wrote on the day.
“Trading the volatility is fine, but stay focussed on the bigger picture. Above $30,000, the targets increase quickly.”
Jelle added that he was “not sure” on short-term price trajectory, but that the destruction of leveraged positions was a “usually a good sign” for market strength.
Fellow trader Crypto Tony was more cautious, choosing to wait for further cues before entering the market.
“$27,700 is the level i am watching close today for a short position. I need to see weakness first to get into this, but even a long here for me looks risky,” he stated.
“PA is rough, so sitting this out isn’t a bad play and to focus on a few stronger Alts.”
Trader Muro focused on $29,500 as the make-or-break zone for Bitcoin, with acceptance or rejection at that level key to determining trend direction.
Watching 29500 for either rejection and a bigger correction (blue drawing)
or consolidation above 29500 would indicate a move higher to me (red) pic.twitter.com/ExWwp6kxZG
— Muro (@MuroCrypto) April 27, 2023
Traders wiped out in BTC price downmove
Data from monitoring resource Coinglass meanwhile showed the extent of the panic among market participants.
On April 26, both shorts and longs suffered as liquidations on Bitcoin passed $150 million. Cross-crypto liquidations totaled over $320 million.
Observers noted the intense reaction to the news event on lower timeframes in particular, among them contributors to on-chain analytics platform CryptoQuant.
Second highest peak of liquidations at position Long in just one hour in 2023
About $36.5M in positions liquidated in the last hour
— G a a h (@gaah_im) April 26, 2023
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
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