Bitcoin saw a dramatic rebound on January 12 as a bearish dive to $30,000 came to an abrupt end.
Bitcoin takes stock but bulls still prevail
Against its lows of $30,250 seen just 12 hours before, Bitcoin thus advanced by $6,350—its strongest daily upwards move in history, records suggest. At press time, $33,000 was in play as a potential support level as ranging behavior returned to the market.
“Today confirms that #Bitcoin will probably not go up at the rate of 1500% per year for more than a month at a time,” Michael Saylor, CEO of MicroStrategy, summarized in tongue-in-cheek Twitter comments.
Amid a sense of relief among commentators, many noted that a pullback was broadly beneficial for a market which had spent several weeks making near-vertical climbs every day.
“Honestly, this $BTC pullback will be good for the overall continuation to the upside. The higher the price, likely the deeper and longer the correction,” popular trader Josh Rager argued late on Monday.
“Better to have a first solid pullback at $40k than higher up. I see this as short term pain that opens more buy opportunities.”
The past 24 hours further saw the return of familiar narratives for those who were present during Bitcoin’s 2017 bull market. While little signs of panic were coming from within the industry, mainstream media was convinced that Bitcoin was in the midst of a major crash.
BTC price nears “critical” flip zone
Eyeing the spot markets, meanwhile, fellow trader Michaël van de Poppe highlighted $37,000 and $38,000 defining a “critical region” for bulls to secure for further recovery.
“Once we break through this level, then most likely we’re going to test a new all-time high or at least take the liquidity above $41,500 or $42,000,” he said in his latest YouTube update.
On the flipside, Bitcoin’s 21-week moving average remained a likely longer-term floor, Van de Poppe added, this due to approach $25,000 in the coming weeks. Last week, statistician Willy Woo also highlighted $25,000 as an outlying eventuality which only a “black swan event” should nonetheless facilitate.
On the topic of Monday’s losses, Woo said he believed that exchange failures had contributed to the extent and velocity of the price drop. Both Coinbase and Kraken, two of the largest U.S. exchanges, saw outages, which in turn unfairly impacted Bitcoin futures platforms through displaying incorrect pricing data.
“Unlike previous crashes in the past 2 years, where over-leveraged markets lead by trader liquidation, this one started on spot markets, then was greatly amplified by a single exchange partially failing, yet did not turn itself off for the good of the ecosystem,” he commented.
“I do wonder if futures exchanges should have just removed Coinbase from their index during the incident to firewall the situation.”