Bitcoin started the trading week with significant volatility, dropping to just above $80,000. Analysts predicted a retest of $78,000 if key support levels do not hold.
Bitcoin Struggles Amid Market Correction
Bitcoin continued its downward trend over the weekend, extending losses that started earlier this month. Digital assets peaked at $80,124 before regaining strength at $81,395. Market analysts expect a drop in resistance levels in the coming days, citing increased pressure from open interest in Bitcoin options.
Volatility Driven by Open Interest and ETF Liquidations
Bitcoin’s price drop coincided with heightened derivatives trading activity. BitMEX co-founder Arthur Hayes predicted that large open interest between $70,000 and $75,000 could generate additional price shifts. The current correction was further impacted by hedge funds liquidating their ETF positions.
Economic Factors and Market Sentiment Influence Bitcoin’s Path
Macroeconomic developments added uncertainty to Bitcoin’s trajectory. This week, the US is set to release two essential inflation reports that might influence Federal Reserve policy decisions. Bitcoin’s Fear & Greed Index dropped to 20, indicating extreme market fear.
Despite current volatility, analysts remain optimistic about Bitcoin's long-term prospects, suggesting recovery and new highs in future cycles.
