Bitcoin continues to fluctuate, losing ground after reaching recent highs. This article examines the reasons for the decline and potential outlook for the cryptocurrency.
Reasons for Bitcoin's Decline
The sharp drop in Bitcoin's price to $116,500 came after the release of FOMC minutes by the Federal Reserve. Fed Chair Jerome Powell reaffirmed the decision to hold off on interest rate cuts, undermining hopes for near-term monetary easing. This event triggered a sell-off of risk assets, including Bitcoin.
Technical Signals and Liquidity Data
Analysts at Hyblock Capital characterized current trading activity as a 'liquidity hunt,' with 15-minute candles showing long wicks, indicating uncertainty. The bid-ask ratio at 10% orderbook depth turned negative, increasing the likelihood of price tapping a liquidation level near $115,883. Liquidity data show pressure on short positions accelerating above $120,000 and the risk of liquidation for long positions below $115,000.
Corporate Buying and ETFs as Indicators
Despite the recent price drop, analysts like Charles Edwards point to positive signs including an uptick in corporate buying, with three companies buying Bitcoin daily at a 100:1 ratio. Spot Bitcoin ETFs have also seen $641 million in inflows since late July, signaling ongoing institutional accumulation.
The drop in Bitcoin's price represents a normal fluctuation amid market uncertainty. Nonetheless, signs of corporate buying and influx into ETFs may point to a positive trajectory ahead.
