The price of Bitcoin has been struggling immensely to maintain its support level of $47,000 since the 4th of December crash. This movement resulted in close to $840 million in leveraged long futures being wiped out. The downside to this move came after the emergence of the new coronavirus variant Omicron, with recent data highlighting the increasing inflation rate in the country.
Although most newcomers have naturally been very scared by the price correction of 26% over the last month, avid investors and whales such as MicroStrategy have added to their increasing positions. On the 9th of December, MicroStrategy announced that it had purchased around 1,434 BTC, which increased its overall holding to 122,478 BTC.
Bitcoin Price Could See A Surprise Turnabout
According to a few traders and analysts, the rationale behind the weakness of Bitcoin has been the contagion fear that Evergrande, one of the largest property developers in China, went on to default on its dollar debt on the 9th of December. The BTC options expiry of $1.1 billion on the 10th of December could also be a major catalyst as bears have already gone ahead and pocketed a profit of $300 million.
Currently, trading along the margins would allow most investors to leverage the positions that they have by borrowing stablecoins and using the same proceeds to buy even more cryptocurrency. When those traders go ahead and buy Bitcoin, they then use the coins as a form of collateral for shorts, which implies that they are betting on a decrease in the price. This is precisely why several analysts have monitored the total lending amounts of BTC and stablecoins in order to gain insight into whether investors have been leaning towards a bearish or a bullish patch. Interestingly, the margin traders of Bitfinex have reduced their longs ahead of the price crash on the 4th of December.
It is being thought that Bitcoin would claim a new all-time high in early 2022.