BTC Pulls Back 10% As El Salvador Adopts Bitcoin Law – And ‘Buys the Dip’
Bitcoin’s price sunk over 10% on early Tuesday along with the market wide crash, just as El Salvador announced that it would officially accept the major cryptocurrency as a legal tender.
As per CoinMarketCap data, Bitcoin’s pull back accelerated as the crypto failed to hold its $50,000 price level — sliding from $51,000 to $44,700 within a single hour, hitting the bottom of $43,285 before recovering some to the current level of $47,118.
According to data from ByBt data, the rapid sell-off resulted in $1.44 billion in futures liquidations of Bitcoin trades in the past 24 hours.
Huobi-BTC witnessed the single largest reported liquidation — worth $43.7 million at the time. Tast majority of the liquidations were longs, representing about 88% of the total liquidations.
El Salvador Buying the Dip
Following the crash, El Salvador’s President Nayib Bukele tweeted that he is ‘buying the dip,’ purchasing another 150 BTC worth about $6.9 million, adding on top of the 400 BTC position. The average cost of the purchase appears to be around the $46,000 price range, if executed through regular exchange rates.
Funding rates went up from 0.015% in early August to as high as 0.03% at the start of September.
Derivatives exchange ByBit saw its funding rate rise to as high as 0.085% in late August.
Relatively high funding rates can indicate that the market is overheating, with too many traders being overleveraged. More often than not, high funding rates will lead to a pullback — which was the case earlier this May.
Funding rates on major exchanges Binance and Huobi dropped to 0.023% and 0.021% at the peak of the sell-off. OKEx, on the other hand, reverted to a negative funding rate of -0.009%, according to Bybt.
As Bitcoin and the broader crypto market slightly recovered from the sell-off, funding rates have stabilized at 0.01% for Binance, Huobi, and ByBit. Funding rate on OKEx remains at a negative of -0.0005%.
With the futures market cooling down, it’s likely that price levels will begin to stabilize once again.
