The Bitcoin (BTC) market has experienced significant turbulence in the past 24 hours due to a series of troubling news reports. The price of the leading cryptocurrency has dropped below the $66,000 mark, causing concern among investors. However, a crypto analyst named Luca believes that the recent price decline is not solely due to the news events.
The Wall Street Journal reported on Friday that Tether, the largest stablecoin, was under investigation by US authorities for potential illicit activities such as money laundering, drug trafficking, and terrorism financing. This news led to a bearish sentiment in the crypto market, causing BTC to fall to around $66,000. Additionally, reports of an Israeli attack on Iran further fueled the downtrend, with Bitcoin hitting a low of $65,700. Overall, BTC’s price dropped by 4% from its Friday high of $68,602.
In a post on Saturday, Luca argued that the price decline was actually caused by an overleveraged market rather than the news events. He pointed out that Open Interest in Bitcoin had dropped by 9% during the downtrend, indicating that the market was highly overleveraged. According to Luca, the recent rally in BTC from $59,000 to $69,000 was driven by Perpetual contracts with minimal spot investment, making the rally unsustainable and prone to significant liquidations and price reversals.
Luca also highlighted the Liquidation Heatmap, which showed that significant liquidations were occurring at supposed support zones where positions were highly overleveraged. He pointed out that $65,000, a major support level, was one of these zones with many long positions. Luca predicted that if a retest of this support zone occurs, Bitcoin could fall to $60,000, which may now serve as a strong support level.
As of the time of writing, Bitcoin is trading at $67,001 with a 0.50% gain in the last day. The daily trading volume has decreased by 28.23% to $26.93 billion, while the market cap remains at $1.32 trillion, solidifying Bitcoin’s position as the largest digital asset in the world.
In conclusion, the recent price drop in Bitcoin may not be solely attributed to the negative news reports but rather to an overleveraged market. Luca’s analysis suggests that Bitcoin could potentially fall to $60,000 if it loses the $65,000 support level. Investors should closely monitor the market and be prepared for further fluctuations in the price of BTC.
