On October 26, Bitcoin hovered around $67,000 after recent news events caused its price to drop by nearly 5%.
Data from Cointelegraph Markets Pro and TradingView showed that Bitcoin hit a local low of $65,530 on Bitstamp, ahead of the daily close on October 25. The drop coincided with increased geopolitical tensions between Israel and Iran, as well as unconfirmed allegations from the Wall Street Journal regarding the potential illicit use of the largest stablecoin, Tether (USDT). Although Tether quickly denied the allegations, market sentiment turned risk-averse.
However, many market watchers believe that the most important factor that affected the price of Bitcoin was open interest (OI) rather than news headlines. “Most people are now saying that the drop was due to some US investigation into the USDT stablecoin, which couldn’t be further from the truth. In my opinion, the drop was not caused by the news,” said popular X account Luca. “The drop was due to the high OI, which market makers are trying to get rid of before the price goes up.”
Data from Glassnode, an on-chain analytics firm, showed that the one-day OI drop on October 25 was the largest since August. Charles Edwards, founder of Capriole Investments, commented on Bitcoin’s risky asset behavior, saying, “It amazes me that Bitcoin is still trading like a risky asset. Bitcoin will trade like gold in these events one day.” He added, “On the positive side, 10,000 BTC Open Interest was wiped out in minutes, and it’s now back to where Bitcoin was trading at $59k.”
With BTC/USD approaching a crucial test at $70,000, some analysts are expecting further declines. “If we look at the liquidation heatmap, we can clearly see how bulls have been trying to catch the local bottom all week, and they failed every time, as there were highly leveraged positions,” noted Luca, who looks at liquidation heatmap liquidations. He warned that if Bitcoin loses support around $65,000, “the next support area at $60,000 will be in jeopardy.”
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