Why are Bitcoin traders worried about a ‘painful’ BTC price dip?

As a seasoned crypto investor with a decade of market experience under my belt, I find myself both intrigued and cautious by the current Bitcoin (BTC) situation. The recent 11% weekly gains have set off alarm bells for many traders, suggesting that we might be in for one last, potentially painful retrace before BTC reaches new all-time highs.


11% weekly increases in Bitcoin (BTC) are causing some traders concern, as they speculate whether the market might experience a final dip before BTC surges towards new record peaks.

Bitcoin long liquidations may be at risk

As a crypto investor, I’ve noticed that the current trading activity around 68.4k seems to be tied to the volatility we experienced back on July 29. On that day, prices plummeted to 49k, a drop that happened just five days later. This connection is something I pointed out in my October 17 post on X.

The recent spike in volatility suggests that “hedging is getting more expensive, and leverage is costing more” as volatility continues to rise, the analyst argues. 

According to TheKingfisher, despite traders utilizing 50 times their initial investment and buying when the price was highest at 67,350, they haven’t been forced out of the market so far. He further mentioned that there’s a significant probability of around 62.48% that these traders could be forced to exit within the next 24 hours due to potential market volatility.

Additionally, TheKingFisher pointed out that the size of the liquidity pool is increasing, which might lead to a “Darth Maul candle”-like withdrawal occurring.

“A drop to 61.3k would be painful.”

Why are Bitcoin traders worried about a 'painful' BTC price dip?

Simultaneously, Michael van de Poppe, founder of MN Capital, expressed views echoing this belief, stating that Bitcoin appears to be repeating a trend observed in the previous seven months.

In a recent post on X, Michaal van de Poppe posted a chart displaying Bitcoin’s recent surge beyond $68,000. At approximately $65,000, the buyers successfully grabbed hold of the supply-side liquidity.

Based on the data presented, it’s predicted that the value of Bitcoin might initially decrease towards approximately $64,130 to gather demand-side liquidity. Following this, there could be a further increase in price.

“I think we’ll correct slightly, the final correction, and then, from next week onward, pushing toward a new all-time high.”

Why are Bitcoin traders worried about a 'painful' BTC price dip?

Additionally, the sharp increase in open positions for Bitcoin futures contracts has caused some analysts to express concern that a potential correction may occur to eliminate excessive long positions.

On the 16th of October, the total value of outstanding contracts (notional OI) for Bitcoin futures traded on the CME reached a record high of 179,745 Bitcoins, equivalent to around $1.2 billion at present exchange rates, according to K33 Research’s Senior Analyst Vetle Lunde.

“Open interest has grown by a massive 32,440 BTC since Oct. 10 – and active market participants drive this growth, seeing a weekly growth in exposure of 40%.”

Why are Bitcoin traders worried about a 'painful' BTC price dip?

What if surging OI is bullish for BTC price?

However, not all analysts believe that surging OI is a precursor for a sharp price correction.

As a crypto investor, I find myself intrigued by the latest development in the world of Bitcoin. The pseudonymous trader Wicked’s observation about the surge in open interest (OI) on CME Bitcoin futures reaching record highs is particularly noteworthy. This trend, in my view, seems to suggest a growing bullish sentiment towards Bitcoin, the largest cryptocurrency by market capitalization.

On the cryptocurrency futures and data platform CoinGlass, an increase in Bitcoin futures Open Interest (OI) suggests a substantial price shift may be imminent.

Why are Bitcoin traders worried about a 'painful' BTC price dip?

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2024-10-17 13:33