Bitcoin, the cryptocurrency winning the hearts of investors around the world, may be headed for a deeper correction after its recent price rise to $35k USD. Market indicators suggest that this could be a result of positive funding rates and reduced liquidity in buy offers below Bitcoin’s current price.
After Wall Street opened on October 24th, Bitcoin stabilized around $34k USD, marking a daily increase of 15%. Its price earlier reached a 17-month high around $35.2k USD, a result of renewed interest due to the potential approval of a Bitcoin-based ETF in the United States.
Bitcoin’s recent dynamic price movements have taken many by surprise. Analysts from Material Indicators pointed out that they expected greater market resistance at price levels of $30.5k, $31.5k, and even $33k USD. However, these levels were quickly breached, especially when a buy order worth $87 million USD emerged at $30.6k USD, laying the foundation for further growth.
After surpassing the $32k USD mark, many buy orders were pulled, facilitating Bitcoin’s rapid jump to $35k USD. We currently observe reduced liquidity in buy offers below the current price, which might create room for a potential correction.
The behavior of funding rates on major exchanges is also of interest. They are currently deep in the positive range, indicating that a significant majority of traders are betting on further Bitcoin price increases. However, historically the market seldom moves in the direction the majority expects, which may mean “shaking out” those who purchased Bitcoin later in its rise.
It’s also worth noting the U.S. Dollar Index (DXY), which has seen a slight increase after a prior weakening. Although Bitcoin has often responded to DXY movements in the past, its reactions are now more mixed. In the coming days, it will be worth monitoring the impact of the Personal Consumption Expenditures (PCE) data and the decisions of the Federal Open Market Committee (FOMC) in the U.S. regarding interest rate policies.
It’s clear that Bitcoin currently faces significant market decisions. Will it once again prove its reputation as an asset resilient to the changing moods of global markets, or will we dive into a deeper correction? Time will tell which of these scenarios will prove true.
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