The Bitcoin (BTC) market has been very volatile in the last 24 hours following a series of worrying news reports. During this time, the leader of the crypto market recorded a significant decrease in its value falling below the value of $ 66,000. However, crypto analyst with the username X Luca posited that this recent price drop could be attributed to another factor beyond news events.
Bitcoin Crash Due to an Overwhelming Market, Not a News Event: Commentator
On Friday, the Wall Street Journal reported that Tether was being investigated by US authorities for the illegal use of the USDT stablecoin for money laundering, drug trafficking, and terrorism among other crimes.
Such a damaging report on USDT which ranks as the largest stablecoin appeared to create bearish sentiment in the crypto market which caused BTC to drop to around $66,000 before the counter statement by Tether management. While recovering a bit, reports of Israel’s attack on Iran ignited another downtrend forcing Bitcoin to reach the bottom of the $65,700 area. Overall, BTC is down 4% from around $68,602 on Friday.
However, in X’s post on Saturday, Luca says that the price drop was due to higher Open Interest rather than perceived news events. A crypto analyst explains that amid Bitcoin’s downtrend, Open Interest also decreased by 9% indicating that the market is overused.
According to Luca, the recent rally of BTC from $59,000 on October 10 to $69,000 on October 21st was driven by endless contracts with little investment. Therefore, the rally was always short-lived with large liquidations and price reversals certain.
Is BTC Headed For $60,000?
In regards to the high Open Interest in Bitcoin, Luca also says that the Liquidation Heatmap shows significant closings occurring in areas that are intended to be supported as these positions are very long.
Following the recent price decline, the analyst highlights that $65,000, which represents a major level of support, is one of the most oversold areas with few long positions. Luca believes that Bitcoin bulls will lose this support area if a retest occurs and BTC may fall to $60,000 which may now hold as an effective support level.
At the time of writing, Bitcoin continues to trade at $67,001 with a gain of 0.50% in the last day. During that time, the daily trading volume of the commodity decreased by 28.23% and has a value of 26.93 billion dollars. With a market cap of $1.32 trillion, Bitcoin remains the world’s largest digital asset.
Featured image from Kinesis Money, chart from Tradingview
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