Bitcoin price dropped to a new low at $3,637, only to quickly reverse course by rallying to $5,260.
Within the last hour Bitcoin price dropped below $4,000 after abruptly plummeting 11.24% to a new yearly low at $3,782. The sharp downside move seems short lived as the price quickly rebounded to $5,260.
BTC USDT 1-hour chart. Source: TradingView
On the 1-hour timeframe traders will notice that a strong oversold bounce took place after the relative strength index dipped to 8.45, a low not seen since November 23, 2018.
For the time being, traders will closely watch to see if the current oversold bounce leads to a more sustained uptick in purchasing volume and some have taken to crypto-Twitter with speculations that the drop below $4,000 may have liquidated the majority of the Bitcoin-backed loans offered by decentralized finance platforms.
BTC USDT daily chart. Source: TradingView
As mentioned in an earlier market analysis, Bitcoin price was expected to bounce right off the high volume node of the volume profile visible range extending from $4,030 to $3,637 and this is exactly what happened.
Bitcoin daily price chart. Source: Coin360
The overall cryptocurrency market cap now stands at $141.1 billion and Bitcoin’s dominance rate is 65.1%.
