“This is similar to what we’ve seen as bitcoin approached the $10,000 and $11,000 levels, where profit-taking occurred on a few different occasions,” said John Kramer, a trader at crypto over-the-counter firm GSR. “Many investors will see this as an opportunity to buy the dip.”
Just like Wednesday, leveraged liquidations played a role in exacerbating bitcoin’s price drop. However, Thursday’s wipeout of long traders on derivatives exchange BitMEX was a bit higher, with $10 million in hourly liquidations topping Wednesday’s $9 million hourly spree, the equivalent of a margin call in crypto parlance.
“Some people who were buying in over $11,500 in BTC with leverage suddenly got stopped out when we moved back down towards $11,100,” said Chris Thomas, head of digital assets for Swissquote Bank.
Thomas suspects bitcoin’s price will not reach new 2020 highs in the near term, despite testing that level as recently as Tuesday when the price hit $12,085. “I think we trade in the $11,000-$12,000 range for a while,” he said.
Ether dominance dominates
The second-largest cryptocurrency by market capitalization, ether (ETH), was down Thursday, trading around $402 and slipping 7.6% in 24 hours as of 20:00 UTC (4:00 p.m. ET). But while the price is down, ether’s dominance of the broader crypto market hit a 2020 high of over 14% Wednesday. Although dipping a bit Thursday, the last time ether’s share was at these levels was back in August 2018.
“A large number of useful projects on the Ethereum blockchain contribute to ether dominance growth,” said Azamat Malaev, co-founder of HodlTree, a decentralized lending protocol. However, scaling is an issue that could cause ether’s share to wane, Malaev added. “To maintain this trend, Ethereum urgently need to scale the network. For ordinary users, transactions are already very expensive”