NEW DELHI (CoinChapter.com) — The US Securities and Exchange Commission approving spot Bitcoin (BTC) ETFs had traders hoping for a massive bull run and probably a new all-time high for the token. However, reality hit hard after the sell-the-news crown mercilessly tore into Bitcoin prices post-ETF launch. The resulting sell-off saw BTC price plummet nearly 21.5% since Jan. 11, reaching a low near $38,500 on Jan. 23 before starting a recovery rally.
Bitcoin Bulls Face Long Liquidation
The drop in BTC price has resulted in the liquidation of $487 million of Bitcoin long positions since Jan. 11, the day of the launch of spot Bitcoin ETFs.
As BTC price refused to rally to the highs trades expected after SEC’s ETF approval, panicked traders started to sell, pushing the token’s price down. The liquidations of long positions were Bitcoin’s highest since Jan. 3’s flash crash.
However, despite the massive liquidation of Bitcoin longs, the funding rate for the crypto asset remained positive. Funding rates refer to the periodic payments that futures contract holders receive, and it is equal to the difference between perpetual contracts and spot prices.
The positive funding rate suggests the market outlook for Bitcoin’s future price action remains bullish, with longs outpacing shorts.
However, the crypto token’s recovery rally since Jan. 26 has resulted in short liquidations that are outpacing BTC’s long liquidations. Between Jan. 26 and Jan. 29, short liquidations amounted to nearly $83 million, while longs only saw $31.6 million in liquidations in the same timeframe.
BTC Price Surges Past $43K
Meanwhile, Bitcoin price surged 3.6% to move past $43,000 on Jan. 29, with bulls entering the market later in the day during trading. The uptrend could see Bitcoin short traders scrambling to buy the underlying asset back and cover their losses as liquidations rise.
The buying pressure might further propel the BTC price, resulting in Bitcoin traders opening new long positions without worrying about liquidations.
If the BTC price continues to rally, the token will likely rise to the resistance near $44,200. Moreover, BTC long traders could enter the market once Bitcoin price confirms a breakout above the immediate resistance, with a target near the $47,300 resistance level.
On the other hand, if the rally fails, Bitcoin traders could see more long liquidations, which might dampen the buying pressure. As a result, the BTC price could drop to the support near $40,800. Moreover, breaching the immediate support might cause Bitcoin price to test the support near $38,200 before recovering.
The RSI for BTC remained neutral, with a score of 53.96 on the daily charts.