Bitcoin (BTC) is undergoing a reset of several key metrics as the drop in BTC price causes leverage to be flushed out.
The price of BTC/USD is currently hovering around $66,000 after experiencing a 5% decline in just one hour, according to data from Cointelegraph Markets Pro and TradingView.
Although Bitcoin has seen a 7% decline in April, the retest of support is already having a cathartic effect on overheated markets. This drop has resulted in a major liquidation event, with $400 million being liquidated for Bitcoin and altcoins combined at the time of writing.
As a result, funding rates have started turning negative, as noted by monitoring resource CoinGlass. Popular trader Jelle commented that “prices are pushing lower, and funding rates plummet as a result.”
Trading firm QCP Capital also acknowledged the significant change in the funding landscape, stating that the speed of the move was due to large liquidations on retail-heavy exchanges like Binance. This caused perpetual (perp) funding rates to go from as high as 77% to flat, bringing spot prices back into the 60-72k range.
While perp funding has compressed, the rest of the forward curve remains highly elevated, according to QCP Capital.
Additionally, Bitcoin’s relative strength index (RSI) readings on daily timeframes are back at the 50 midpoint. This level has been important in defining Bitcoin’s performance since the end of January. An RSI above 70 indicates an “overbought” signal for price, which is when Bitcoin tends to deliver its strongest performance.
In terms of volatility, Bollinger Bands on daily timeframes are suggesting a fresh pre-breakout phase for BTC/USD. Popular analyst Matthew Hyland compared this tightening of Bollinger Bands to levels not seen since the move started from $45,000 in February.
It’s important to note that this article does not provide investment advice or recommendations. Readers should conduct their own research before making any investment or trading decisions.