During trading session of today, Saturday, the crypto market took a small crash, with Bitcoin’s price falling by 0.32% and shortly dropping below the $63,000 mark. This kind of drop can sometimes be a pullback for short-time, giving buyers a chance to detect their breath and regain speed.
However, there is a twist, high-leveraged long positions in Bitcoin are facing liquidation risks, which could add more pressure to the market.
What’s Causing the Downturn?
Here are some causes that marketers have predicted; let us know about it in detail:
Recent Rally and Speculation: Bitcoin’s price made a strong comeback over the past two weeks, going from $53,630 to $63,010, a solid 17.5% increase. This trend was caused by speculation about a Federal Reserve rate cut, which has now been fixed at 475-500 basis points. This assumption brought back investors’ interest in more difficult assets like cryptocurrencies.
Increased Leverage: Bitcoin’s estimated leverage ratio reached a yearly high of 0.21% during this time. This means there were more leveraged positions compared to open interest. As per their history, such an increase in leverage often shows more market volatility as traders place their bets on price movements.
Liquidation Risks: The effort to keep Bitcoin’s price more than $63,000 has raised the risk of liquidation for buyers, adding to the current selling pressure.
Dormant Bitcoin Movement: According to a recent tweet from Arkham Intelligence, 250 BTC (worth about $15.95 million) were driven by five addresses from the ‘Satoshi era.’ These addresses had been idle for 16 years. Such movements usually lead to market belief and increased volatility.
Sentiment Analysis: Sentiment analytics told out a sudden end in the Positive vs. Negative sentiment ratio following the first rate cut in four and a half years. This positive sensation often signals an extremely optimistic scenario during a market rally, which can lead to a counter-trend bearish move.
Technical Analysis: A very well-known trader Martinez Ali noted that Bitcoin is retesting the 200-day Simple Moving Average (SMA) line. Historically, failing to recycle at this level has started significant corrections, as seen in 2020, 2018, and 2014. This supply has slowed the recovery speed in Bitcoin and the broader market.
Conclusion
Despite the short-term dip, the trend in Bitcoin’s price is likely to continue into the next week. The overall sensation in the crypto market remains positive, with the ETF market marking a second consecutive week, attracting $700 million in inflows over the past two weeks.
To know more in detail, click here.
Disclaimer
The information provided in this article is for informational purposes only. It does not constitute financial advice or any investment recommendation. Cryptocurrency markets are highly volatile and involve significant risk. Always do your own research or consult with a licensed financial advisor before making any investment decisions.
