The price of Bitcoin (BTC) rose to $10.272 on July 26 in an unexpected weekend rally. 74 million dollars in long contracts were settled on BitMEX alone, taking many traders off guard.
According to Coinmarketcap, Bitcoin’s market capitalization is currently USD 182,184,515,846.
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There seem to be two main reasons behind the sharp increase in Bitcoin’s price from $9,700 to over $10,200. There is the liquidation of over-leveraged short contracts and traders who benefit from the overselling of alternative cryptosystems (altcoins).
The pattern of profit taking observed when the price of Bitcoin peaks
When the price of Bitcoin started to rise, the main altcoins, as well as the good performance DeFi tokens, started to fall. Ethereum dropped from USD 322 to USD 311, and DeFi tokens, including Aave and YFI, were rejected.
The simultaneous rejections of major altcoins and the rise in Bitcoin prices suggest that traders benefited from recent altcoin rallies. When traders moved the altcoin gains to Bitcoin, it possibly triggered an upward trend in Bitcoin’s price, while the altcoins declined.
ETH, for example, rose from $247 on July 23 to a daytime high of $322, posting a 30% gain. Despite strong altcoin sentiment, investors may be taking a more cautious approach to hedging their gains.
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Mass liquidations of short contracts
When Bitcoin exceeded $10,000, it caused the over-leveraged short contracts to be liquidated. When Bitcoin’s price reached $10,200, it caused a cascade of settlements, totaling $74 million.
Bitcoin has witnessed many phases in which more than $50 million of short or long contracts are liquidated. But that this occurs within a few hours is less typical.
Mass liquidations of long contracts at $10,000 also suggest that $10,000 to $10,200 remains a zone of strong resistance. As soon as the price of Bitcoin reached $10,200, the price fell below $10,000, marking a short-lived rebound.
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