Bitcoin Pares Losses After Kicking Out Leveraged Traders

Bitcoin spiked to recover losses from its recent dip below $54,000, placing itself for a possible bull run after it wiped out more excessive bull leverage on Tuesday.

Bitcoin broke below the $54,000 support zone on Tuesday morning to $53, 350 (N25,074,500 @BDC rate) after long positions worth about $368 million were liquidated on major exchanges, adding to the over $1 billion-dollar profit-taking of yesterday.

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The world's largest cryptocurrency recovered a 10 percent deficit to trade around a break-even point of $55,800, according to data from Coindesk 20.

The market now looks ready for a fresh move higher, as the bitcoin perpetual futures funding rate – the cost of holding long positions calculated every eight hours – has dropped sharply from 0.124% to 0.08% after excess bullish leverage was wiped out by the cryptocurrency’s pullbacks Monday and Tuesday.

However, the possibility of a bigger selloff hangs around the token dropping below the widely tracked monthly volume-weighted average price (VWAP) of $53,000.