Bitcoin Drops Nearly 7% after Setting a New High Record of $ 23,770

Bitcoin rose to its highest ever highs above $ 23,000 earlier on Thursday, before quickly falling back over $ 1,500.

The cryptocurrency dropped from the all-time high of $ 23,770 to $ 22,185 in the roughly 30 minutes to 09:45 UTC – a 6.67% drop, according to the CoinDesk 20. Prices rose more than $ 2,000 to reach new record highs above $ 23,700 in the first nine hours of the day (UTC).

For a press time price of $ 22,560, bitcoin is holding up 14.37% on a 24-hour basis.

The rally still looks solid, despite recent losses. The derivatives market shows no signs of overheating and chain data shows strong holding feelings.

Although the average level of bitcoin futures “funding rate” across major exchanges has risen from 0.005% to 0.036%, it is still well below the highest of 0.093% seen before the November 24 price fall. Leverage is too bullish a departure and the cryptocurrency has a chance to rally further.

Calculated every eight hours, the funding rate reflects the cost of holding long positions. It is positive (or shorts paid) when flatsters trade for a spot price premium. As such, a very high funding rate is seen as a sign of leverage being excessively skewed to the bullish side, or over-thinking conditions.

Moreover, there are no signs that large investors are looking to book profits, with prices easily rallying to record highs above $ 23,000. At press time, some 2,400,000 coins are being held on exchanges. That’s the lowest since August 2018, according to a Glassnode data source, and suggests investors are not preparing for a sale.

Investors generally move coins from their wallets to exchanges when they plan to liquidate their holdings and take profits.

In a sign of a strong holding sentiment, exchange balances have fallen over 15% this year, taking the sell-side liquidity off the market.

Traders should, however, keep an eye on spot market volumes, as liquidity can dry up over the Christmas holidays. That could produce wild swings on either side.

Patrick Heusser, head of trading at crypto Broker AG of Zurich, told CoinDesk that the move above $ 20,000 needs to be complemented by continued growth in trading volumes.

“In terms of volume on the spot, we have yet to reach the amount we saw in November (but, we have another 13 days to go). With holidays around, it doesn’t look like the December volume would top the November count, ”said Heusser, adding that would be the first warning of bull fatigue.