After Bitcoin (BTC) price flirted with a $42,000 all-time high on Jan. 8, it stabilized in a tightening range between $39,000 to $41,500 for two days and the pennant structure on the shorter-term timeframes hinted that a breakout to $45,000 was a possibility.
This all changed quite suddenly Jan. 10 as the $39,000 support failed to hold and Bitcoin price entered a steep correction.
BTC/USD 4-hour chart. Source: TradingView
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A swirling and cruel 26.6% drop took BTC down to $30,100 over the next 30 hours and $1.5 billion in cascading liquidations at derivatives exchanges boosted the correction. Interestingly, this occurred just as the open interest on BTC futures reached a $12.7 billion all-time high.
Derivatives exchanges BTC futures open interest in USD. Source: Bybt.com
Today’s price action presents a story of doom, gloom and liquidations, but what it fails to mention is that the Bitcoin price crashed by 20.4% just one week ago as it tested sub $28,000 levels.