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.
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.
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.
The overall cryptocurrency market cap now stands at $141.1 billion and Bitcoin’s dominance rate is 65.1%.