Bitcoin (BTC) suffered an unprecedented drop on May 19, dropping as low as $ 30,000 in a wild three-hour decline that turned the market upside down.
As the panic in the market faded, the issue has now turned into the structure of the recovery process, rather than where the bottom price is. What are the factors that make the current BTC price action special, let’s examine it together.
A leap like no other
The BTC / USD pair dropped from $ 39,000 to $ 30,000 on Wednesday in just one hour. This is a tremendous setback, but not unprecedented from a historical perspective.
In dollar terms, this one-hour period was unlike anything seen before. Even with the COVID-19 crash in March 2020, Bitcoin’s 60 percent correction was smaller when calculated in dollars.
$ BTC: Officially a +50% correction.
First one in more than a year.
— David Puell (@kenoshaking) May 19, 2021
What followed were more unusual.
Bouncing from exactly $ 30,000, Bitcoin rose to almost $ 37,000 and broke $ 40,000 shortly thereafter. While this process left March 2020 behind in both percentage and dollar terms, it also recorded as the biggest recovery ever seen.
Bitcoin, which skeptics describe as the “dead cat splash”, continued to be traded around $ 39,000 at the time of writing this article.
Leveraged traders are on the opposite corner again
In the last 24 hours, the actors in the Bitcoin market have changed, and a different class of traders is likely to dominate the market right now.
The recovery from the bottom level in a short time proves this. Because in total, daily liquidations between traders exceeded $ 8 billion.
Due to the magnitude of the drop in dollar terms, traders with long positions probably left the market empty-handed.
Extreme fear like Bitcoin’s darkest days
How nervous traders were after the recent dips is reflected in the Crypto Fear and Ambition Index.
The traditional sentiment gauge fell 11 percent from the “over-ambitious” zone, the lowest it has seen since April 2020. The Fear and Ambition Index was at 73 on May 9, indicating “ambition”.
As a result, cryptocurrency sentiment is currently at the oversold point and can be considered unnecessarily biased downwards.
Popular Twitter account Bitcoin Archive, against the index, “Bitcoin is worth $ 40,000 and the risk level is bottom.” made his comment.
“Buy while others are afraid.”