As a seasoned analyst with over two decades of experience in traditional and digital markets, I find Luca’s analysis compelling. Having witnessed numerous market cycles, both bullish and bearish, I can attest to the importance of understanding underlying factors that drive price movements.
In the past 24 hours, the Bitcoin (BTC) market has experienced considerable disruption due to several concerning headlines. As a result, the dominant cryptocurrency has seen significant drops, with its value dipping below the $66,000 price level. Yet, an analyst named Luca, who goes by X username, suggests that this recent price drop may be influenced by factors other than the news events alone.
Bitcoin Crash Due To Overleveraged Market, Not News Event: Analyst
Last Friday, it was revealed by the Wall Street Journal that Tether is being scrutinized by American law enforcement due to suspicions about the misuse of their USDT stablecoin in money laundering schemes, narcotics trade, terrorist activities, and various other illegal activities.
Such a damaging report on USDT which ranks as the largest stablecoin appeared to induce a bearish sentiment in the crypto market which caused BTC to fall to around $66,000 prior to a refuting statement by Tether’s management. While in partial recovery, reports of an Israeli attack on Iran also ignited another downtrend forcing Bitcoin to reach a local bottom of $65,700. Overall, BTC’s dropped by 4% from around $68,602 on Friday.
In a recent post on Saturday, Luca suggests that the drop in Bitcoin’s price wasn’t due to the reported news events, but rather because of a high Open Interest. He explains that during the downtrend in Bitcoin, the Open Interest decreased by 9%, suggesting that the market was excessively leveraged.
As stated by Luca, the surge in BTC’s value from $59,000 on October 10th to $69,000 on October 21st can be attributed primarily to Perpetual contracts, with minimal direct investment. This implies that the rally was likely transient and inevitable, as it was accompanied by substantial liquidations and a possible price correction.
Is BTC Headed To $60,000?
Regarding the substantial Open Interest in Bitcoin, Luca notes that the Liquidation Heatmap indicates a high number of significant liquidations taking place at what appear to be support levels. This is because the positions in these areas are heavily leveraged.
After the recent decrease in price, the analyst points out that $65,000, a significant point of support with numerous long positions, is one such overextended area. Luca anticipates that if a retest happens, the Bitcoin bulls might lose this support zone, causing BTC to potentially drop to $60,000. This lower level could then provide effective support.
Currently, as I’m typing this, Bitcoin is being traded at approximately $67,001, marking a 0.50% increase over the past day. However, its daily trading volume has decreased by 28.23%, amounting to around $26.93 billion. At the moment, Bitcoin holds the title of the largest digital asset globally with a market capitalization of about $1.32 trillion.
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2024-10-27 21:11