Bitcoin price is falling sharply as bulls fail to sustain the price above a key support area, which could send a bearish signal for the entire cryptocurrency space
Most cryptocurrencies are also facing similar price action, so the market is expected to remain under bearish pressure for some time.
Bitcoin price plummets! While volumes remain relatively low, the level is now approaching key support near $66,000. This shows that buyers are skeptical of the upcoming price movement, which forces traders to consider whether to buy or sell Bitcoin. As a result, prices began to fall due to reduced buying activity. This may be cause for alarm as a major factor in the recent decline in Bitcoin prices.
High Funding and Open Interest
Funding rate is nothing but a fee set by the exchange to maintain a balance between the futures price and the spot BTC price. Changes in funding rates have a huge impact on prices. Negative interest rates occur when the futures contract price is lower than the spot price. Whenever interest rates turn negative, it indicates that the market may experience a downward trend.
But the current picture is mixed, as interest rates are quite high, indicating that traders are willing to pay more to maintain long positions. This also indicates that there are many leveraged positions in the market that whales or large holders may exploit. They may trigger price declines by selling off their holdings, which may further lead to a cascade of liquidations among leveraged traders.
Increase grayscale outflow
Since the launch of the spot Bitcoin ETF, increased inflows have led to significant price increases. This is also the main reason why BTC price has pushed the formation of new ATH close to $74,000. Additionally, BlackRock, one of the major investment firms, quickly accumulated over 100,000 BTC in just a few months, making market participants optimistic about the price. Additionally, Grayscale Bitcoin Trust (GBTC) is a popular investment vehicle for institutional investors to gain exposure to Bitcoin.
Bears have been showing tremendous strength since BTC price broke above $73,800. One of the main reasons is the massive outflow of grayscale funds, which indicates reduced institutional demand. As bulls continue to remain passive, this has a negative impact on the price, paving the way for bears to exert bearish pressure.
historical precedent
Historical patterns in Bitcoin prices suggest that the coin has experienced price corrections before the halving event. Halving occurs approximately every four years, when rewards are cut in half. This in turn reduces new issuance of the token and has a positive impact on the BTC price.
This expectation may lead some investors to sell their holdings in anticipation of a price correction. However, this correction is likely to be short-lived, which could cause Bitcoin (BTC) price to rise significantly in the coming days.
