Bitcoin’s price is facing a downturn today, influenced by low trading volumes in the crypto market and global conflicts that are impacting investor sentiment.
Despite a bullish start to the year, where Bitcoin gained 66.1% year-to-date, the momentum has dwindled, resulting in a 9.4% loss in the past six months. The sustained bullish outlook post the Grayscale court victory has disappeared, and September’s losing streak has extended into October.
This contraction has led analysts to draw parallels between the current Bitcoin market and the pre-bull market cycle of 2015-2017, with $28,000 emerging as a significant resistance level.
In the early months of 2023, short positions dominated liquidations in the futures market, causing a flash crash on Aug. 17. Over $213.5 million in longs were liquidated, marking the largest single day of Bitcoin long liquidations since the Terra Luna collapse in May 2022.
Since this flash crash, there has been a continuous outflow of capital from risk assets like Bitcoin. Options volume saw a 40% decline on Oct. 9, indicating reduced market participation.
Bitcoin long liquidations persisted in October, with $12.6 million liquidated in the 24 hours preceding Oct. 9. The absence of buying pressure from traders during these liquidations has negatively impacted Bitcoin’s price. Additionally, trading volumes continue to drop, with Binance losing market share for the seventh consecutive month after discontinuing zero-fee trading.
Analysts have described Bitcoin’s price behavior as illiquid and choppy due to inconsistent liquidity and trading volume.
Despite short-term uncertainties, institutional investors maintain a positive long-term outlook. Large institutions are actively advocating for Bitcoin financial instruments, potentially triggering a bull run. Currently, nine top investment firms have ETF applications pending with the SEC.
However, the SEC’s inclination to delay decisions on approving Bitcoin ETFs until 2024, including BlackRock’s application, remains a potential dampener on investor sentiment.
Speculations about BlackRock suppressing Bitcoin price ahead of their ETF launch are dismissed as conspiracies, as a BTC price crash would be detrimental to them.
Raoul Pal of Real Vision believes macro factors such as interest rate cuts and ETFs will be the catalysts for the next Bitcoin bull run.
Bitcoin’s price is intricately linked to macroeconomic events, and ongoing conflicts, regulatory actions, and interest rate hikes are expected to influence BTC price dynamics.
The recent conflict between Russia and Ukraine briefly caused an 8% drop in Bitcoin price, emphasizing the impact of geopolitical events on market volatility.
Despite short-term fluctuations, market participants anticipate Bitcoin’s price recovery, especially with increasing support from financial institutions.