Bitcoin (BTC) lost 25.4% in 48 hours, bottoming at $15,590 on Nov. 9 as investors rushed to exit positions after the second largest cryptocurrency exchange, FTX, halted withdrawals. More importantly, the sub $17,000 levels were last seen almost two years prior, and the fear of contagion became evident.
The move liquidated $285 million worth of leverage long (bull) positions, leading some traders to predict a potential downside of $13,800.
What an exciting time to be alive! Loving the volatility these elites are creating! They really wana buy LOW before the next bull cycle! Thank goodness we were ready months in advanced!
Are we gona hit that 13k target? Who cares, its a huge buy opportunity long term! $BTC #BTC pic.twitter.com/2v0ThmIoNG
— JD (@jaydee_757) November 14, 2022
As described by independent market analyst jaydee_757, the bearish trend continues to exert its pressure, with $17,200 as a resistance level. Still, such an analysis provides no guarantee that the ultimate $13,800 bottom will be hit.
Curiously, the price action coincided with improving conditions for global equity markets on Oct. 4, as the S&P 500 index gained 6.4% between Nov. 10 and Nov. 11 and the tech-heavy Nasdaq Composite rallied 9.5%. Hence, at least from a technical perspective, Bitcoin completely decoupled from traditional finance.
Additional uncertainty on Bitcoin has been brought on by Grayscale Bitcoin Trust (GBTC) trading on over-the-counter stock markets after the $11.4 billion fund discount to its assets surpassed 40%.
watching GBTC liquidity and lenders exposure to said product for contagion risk
seems someone is selling a lot of GBTC
discount is now >40% and widening, implied BTC price is $9K, and a lot of GBTC is sitting in toxic places atm
— Vance Spencer (@pythianism) November 11, 2022
As noted by Vance Spencer, the implied BTC price according to the funds’ trading is below $9,000, and pressure should continue if some holders use their shares as collateral for loans.
Still, the negative sentiment that caused Bitcoin to break below $20,000 does not mean professional investors are bearish at the current price levels.
Margin traders did not close their longs
Monitoring margin and options markets provide excellent insight into how professional traders are positioned, allowing investors to borrow cryptocurrency to leverage their trading position.
For instance, one can increase exposure by borrowing stablecoins to buy an additional Bitcoin position. On the other hand,…
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