How we tell when forced selling is finished

Late on Sunday night the exchanges closed more than a billion dollars of leveraged crypto bets, most of them bets on a rise. Ether's traders lost more than bitcoin's. Bitcoin is at $74,534 this morning, its lowest in a month.

A day like that usually gets one reading. The over-stretched bets are gone, the people who were going to be forced out have been forced out, and the price can find its buyers again. By Monday evening that reading looked plausible. Bitcoin set its low early in the European morning and held above it through the US day, and the US stock market surged, with the Nasdaq up nearly 3%.

Bitcoin didn't join in. It ended Monday lower than it began, by our daily reading, and the investors in the US bitcoin funds took money out again, as they had on Thursday and Friday. The ether funds' investors took out more on Monday than on any day since the end of October.

So the question for anyone holding crypto this morning is a plain one. Did the exchanges clear the market on Sunday, or only its first layer? Three things tell you, and they are the three we check after a day like it.

The first is how much of the betting is still open. The second is whether the people who stayed in are still paying to stay. The third is who is sitting at the price they paid, because they are the next sellers if the price slips again.

We ran all three on Sunday's selling. Then we went back through our record to June, the last time bitcoin had a run of days like this, to see what the three looked like when the fall actually ended. June had three days like Sunday, the first on the 4th and the last on the 25th, and the low came after the last of them.

Two of the three came back within a day of the selling. The third came back on Monday morning from Strategy, in the weekly report that answered the question we left open on Friday, and it is the one that decides whether a bounce from here holds.