Did 8% Bitcoin price drop change bulls' chance of BTC hitting $100K?

As a seasoned crypto investor with a few battle scars from market fluctuations, I can confidently say that the recent 8.2% pullback of Bitcoin (BTC) is nothing more than a temporary blip on the radar screen. The price correction does not seem to signal a trend reversal but rather reflects excessive leverage among derivatives traders.

Over the past four days, I’ve observed a 8.2% pullback in Bitcoin (BTC) from its all-time high of $99,609 on Nov. 22. This downward trend resulted in approximately $250 million worth of liquidations for bullish, leveraged positions. Despite this decline, I haven’t seen any signs of panic, and key metrics remain resilient, avoiding a shift into bearish territory.

To put it simply, over a five-day period from Nov. 9 to Nov. 13, there was a 22.6% increase in prices that led to approximately $342 million worth of liquidations for buyers through Bitcoin futures contracts (as shown in the purple area). This recent price drop might not necessarily mean a shift in trend, but rather it may be due to overleveraged positions among traders using derivatives, which is a temporary situation.

To determine if the failure to surpass the $100,000 psychological mark influenced investor attitudes, it’s essential to scrutinize the actions of Bitcoin miners. These organizations jointly possess approximately 1.8 million BTC, which is worth more than $166.3 billion, and are responsible for minting about 3.125 BTC with each mined block.

Over the past few days, miners have been selling off around 2,500 Bitcoins each day, which translates to a whopping $231 million. On the flip side, Bitcoin spot exchange-traded funds (ETFs) based in the U.S. have seen an average daily investment of about $670 million from November 18 to November 22.

Although it’s been suggested that miners selling could be the reason for not reaching beyond $100,000, this argument seems inadequate. It’s worth noting that MicroStrategy declared a $5.4 billion Bitcoin purchase on November 25th, which clearly indicates strong institutional interest.

As a researcher examining the Bitcoin market dynamics, I’ve observed that long-term investors have also played a role in selling pressure. Observing historical patterns, it seems there’s a resemblance to late March behaviors following repeated unsuccessful attempts to surpass the $73,500 threshold. The profit-taking by some significant players or “whales” initiated a two-month correction, eventually leading Bitcoin to touch a low of $60,830 on May 1st.

Is the Bitcoin bottom at $82,500?

Based on past patterns, it’s possible that Bitcoin’s price might dip to approximately $82,500 – this would represent a typical 17% reduction from its record high, but it wouldn’t necessarily indicate the start of a full-blown bear market. Interestingly, during a similar correction period between March 14 and May 16, US spot Bitcoin ETF ownership remained relatively stable, and MicroStrategy made just one buy, acquiring 24,400 Bitcoins.

On this occasion, the scenery presents a substantial change. The purchasing of Spot ETFs remains robust, with more institutional investors emulating MicroStrategy’s strategy. Some of these institutions are MetaPlanet from Japan, Semler Scientific in the US, and Marathon Digital, a prominent global Bitcoin miner. This synchronized activity hints at increasing corporate acceptance, which might serve as a sturdy foundation for Bitcoin’s price stability.

Despite some doubts about whether these entities will continue buying Bitcoins at the same rate, the news that Microsoft shareholders might be considering a similar move adds strength to investors’ trust in the market.

If whales and arbitrage desks foresee a significant price drop, the costs of hedging increase, causing the put-to-call ratio to exceed 6%. In normal markets, the 25% delta skew usually falls between -6% and +6%. However, if the skew strays from this range, it indicates either excessive fear or unwarranted optimism.

The data from the options market suggests a robustness in this context. The optimistic feelings noted between November 16th and November 26th have lessened, since the prices for put (sell) and call (buy) options are now comparable, suggesting a transition to a neutral outlook. However, on-chain statistics and derivatives reveal no signs of strain or hint of an impending bear market, implying a bullish prediction for Bitcoin‘s price in the future.

In other words, this article serves as a source of general knowledge rather than legal or financial guidance. The perspectives shared within this piece belong solely to the writer and may not align with the viewpoints of CryptoMoon.

2024-11-26 21:42

Did 8% Bitcoin price drop change bulls’ chance of BTC hitting $100K?

Is the Bitcoin bottom at $82,500?

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