Why Is Bitcoin Price Down Today?
August 01 2023 - 2:24PM
NEWSBTC
Today, Bitcoin took another dive, this time to its lowest level
since June 21. A check on Bitfinex reveals a BTC price slump to
$28,641. Coinbase, America’s largest crypto exchange, reported an
even more drastic drop to $28,478. Although the price bounced back
slightly to hover just below $29,000 (-1.4% in the last 24 hours),
the downward trend sparks questions. Why Is The Bitcoin Price On
The Decline? James V. Straten, a renowned on-chain analyst,
recently tweeted: “Bitcoin drops below $29,000 as open interest
spikes while funding rates go lower. As a result of the biggest
long liquidation since 24th July.” As the analyst states, Bitcoin’s
price trend can be majorly attributed to long liquidations. The
liquidation data from Coinglass indicates that $23.6 million in BTC
longs were liquidated, a relatively small amount but significant
considering the market’s state. In an illiquid market, smaller
orders can significantly sway the market. According to data from
Kaiko, BTC and ETH have seen a decline in 90-day realized
volatility this year, with volatility levels currently hovering
around two-year lows. Related Reading: Bitcoin Crucial Moment: Will
Resistance At $29,500 Trigger A Sell-Off Or Surge? Moreover,
Kaiko’s data also reveals that Bitcoin’s correlation with the
S&P 500 continued to decline in July, falling to just 3%. The
last time it was this low was back in August 2021. This suggests
that the traditional financial market’s influence on Bitcoin’s
price is waning, an impulse much needed at the moment. Analyst
@52Skew noted that BTC Spot CVDs & Delta Retrospective were
hinting at the downtrend. “There were clear signs of spot supply
& sellers, especially on Coinbase. Aggregate Spot CVD indicated
heavy supply prior to sell off: Price grinding higher into limit
supply & market spot selling.” Meanwhile, renowned trader
@exitpumpBTC pointed out on Twitter: “Someone sitting with 400 BTC
buy wall at $28,900 on Binance spot orderbook. Fully closed my
short.” This buy wall might provide some support for Bitcoin’s
price at the current level. Bitcoin Market Sentiment Weighs On
Price The Bitcoin Market Sentiment, as represented by the Fear
& Greed Index, is presently at 50 – neutral. However, the
sentiment on the Bitcoin and crypto market is lukewarm, despite BTC
being up 76% year-to-date. The fading momentum seems to be due to
the Bitcoin and crypto market’s current “summer slumber.” The
bullish news seems already priced in, and volumes on exchanges are
dwindling. Related Reading: US Presidential Candidate Defends
Bitcoin, Calls Out Environmental Critics Interestingly, despite
some major bullish developments for the broader crypto market,
including Blackrock’s filing for a spot ETF and the victory for XRP
and Ripple, the retail and institutional interest remains low. This
is reflected in the low liquidity and volatility in the market.
Remarkably, the crypto space has been rocked by an array of events
recently. From the rise of liquidity absorbing meme coins to scam
tokens, the market has seemingly descended into chaos. In the midst
of all these, impending events such as the Curve (CRV) hack as well
as fears of a potential DOJ action against Binance and Tether,
continue to add anxiety to the market. In this uncertain state,
there are no new investors to catapult the market upward. At press
time, BTC traded at $28,990. Featured image from iStock, chart from
TradingView.com
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