Bitcoin bore witness to some intense overnight volatility that came about after it hit highs of $12,000 From this point, the cryptocurrency decline to lows of $11,000 before finding some strong support Despite buyers protecting this level, its inability to post any type of strong bounce here does seem to be a negative sign for the cryptocurrency The sharp cliff formed as a result of the overnight selloff also led to massive liquidations amongst buyers Despite the blow this struck to BTC’s market structure, some analysts remain bullish, noting that this was a necessary sentiment reset after bulls got over-zealous

Bitcoin has been slowly grinding higher throughout the past few weeks, posting consistent daily gains that ultimately led its price up to highs of $12,000 late yesterday evening.

The intense selling pressure found here proved difficult for bulls to surmount, and after a brief period of trying to push above this level, BTC saw a violent selloff.

This decline led the benchmark crypto down to lows of $11,000 before it found some support and bounced back to $11,500. It has since declined back down to $11,000.

One analyst is contending that this may be a positive development for the cryptocurrency, as it provided a much-needed sentiment reset amongst bulls after liquidating $500m worth of long positions.

At the time of writing, Bitcoin is trading down over 6% at its current price of $11,080. This is around where it has been hovering throughout the past few hours.

Buyers have established $11,000 as a support level for BTC, but it remains unclear as to how long it will hold for.

BTC has avoided seeing any type of cascade of liquidations despite the strength of the downside movement.

In total, $500 million worth of long positions were liquidated as a result of this selloff. This liquidation trend is showing signs of slowing, however, as BTC’s price stabilizes.

Because buyers overleveraged themselves, a continued downside movement may be catalyzed by the ongoing “long squeeze.”

One analyst is now theorizing that Bitcoin is positioned to push higher in the near-term due to the strong support and stable funding rates that it currently has.

He believes that this was a “cleansing” of bull’s greed.

“Like I said yesterday, greed was at 80. We needed a cleansing and we just got it. Funding going baseline again across the board. And it’s sitting on support right now… Let’s run it back.”

Now that overleveraged long positioned have been liquidated and bulls are no longer feeling euphoric, Bitcoin may be able to start reestablishing its technical strength.

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