As a seasoned researcher and analyst with over a decade of experience in the cryptocurrency market, I have seen my fair share of bull runs and bear markets. The current 3% decline in Bitcoin’s price after a strong weekly performance is a reminder that even the most resilient assets are not immune to market volatility.
At present, the price of Bitcoin (BTC) is dropping by approximately 3% following a robust weekly surge in the previous seven days. Moreover, Bitcoin’s day-to-day chart indicates a bearish pattern that has been observed in the past, causing some investors to worry about another challenge at the $60,000 price point.
Bitcoin forms a daily bearish engulfing candle
On October 21, Bitcoin experienced a 2.4% drop which created a bearish engulfing pattern on its daily chart. This kind of pattern often signals a potential short-term or long-term reversal in the trend. The effectiveness of this pattern, when combined with other market confirmations, is typically around 60% to 70%.
For the past seven months, whenever a bearish engulfing pattern appeared close to a price peak, it was followed by a significant price decline. The declines grew more pronounced after each instance, with prices dropping up to 26% from July 29 to August 5.
But, a significant reason for pessimism arises from recent occurrences that have directly influenced prices during the last several months.
As a crypto investor, I’ve noticed that the surge in Bitcoin’s futures and derivative market has significantly influenced its recent price movements. The open interest in Bitcoin has soared past $40 billion, coinciding with the price reaching an all-time high of $69,000.
Despite ongoing issues with a negative spot orderbook Conditionally Vulnerable to Dust (CVD) affecting Bitcoin, this situation underscores the scarcity of active buyers on trading platforms. As the graph shows, a seemingly inverse relationship often exists between increased open interest, negative spot CVD, and a bearish engulfing pattern, which typically leads to falling prices for Bitcoin.
Considering that history repeats itself, with Bitcoin’s past price corrections as a guide, a dip down to around $60,000 might not be unexpected.
Spot Bitcoin ETFs $79M in outflows
On October 21st, Bitcoin’s price didn’t manage to go above $70,000, possibly indicating that institutional investors might have paused their aggressive buying. This pause could be reflected in the US ETF market, where there was an outflow of approximately $79.1 million on October 22nd.
Previously, net negative ETF inflows were observed back on Oct. 10 with a $81.1 million outflow.
From October 10th to October 22nd, an impressive sum of $2.6 billion was invested, pushing the total managed assets to a record-breaking $65 billion.
On the other hand, the existing cooldown period suggests that certain institutions might be temporarily excluded, as Bitcoin faces challenges in breaking through a crucial resistance point.
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2024-10-23 18:52