The Bitcoin (BTC) market has been significantly disrupted over the past 24 hours following a series of disturbing news. During this period, the cryptocurrency market leader experienced noticeable declines and its price dropped below the price of $66,000. However, a cryptocurrency analyst with the username X Luca postulated that this recent price decline could be attributed to another factor beyond the news events.
Bitcoin Crash Due to Over-Leveraged Market, Not News Event: Analyst
On Friday, the Wall Street Journal reported that the US authorities had initiated an investigation into Tether in connection with the potential illegal exploit of the USDT stablecoin, among others. to money laundering, drug trafficking and terrorism.
Such a damaging report on USDT, which is the largest stablecoin, seemed to trigger bearish sentiment in the cryptocurrency market, which caused BTC to drop to around $66,000 before Tether management’s rebuttal statement. During the partial recovery, reports of an Israeli attack on Iran also started another downtrend, forcing Bitcoin to hit a local low of $65,700. Overall, BTC fell 4% from around $68,602 on Friday.
However, in Post X on Saturday, Luca states that the price drop was due to high levels of open interest rather than alleged news events. The cryptocurrency analyst explains that amid Bitcoin’s downtrend, Open Interest also dropped by 9%, indicating that the market was heavily indebted.
According to Luca, BTC’s recent surge from $59,000 on October 10 to $69,000 on October 21 was fueled by perpetual contracts with little or no spot investment. Thus, the augment was always transient, and significant liquidations and price reversals were certain.
Is BTC heading to $60,000?
Regarding the high interest in Bitcoin, Luca also states that the liquidation heat map showed that there could be significant liquidations in supposed support zones as these positions are highly inflated.
With the recent price decline, the analyst highlights that $65,000, which is the main support level, is one of those highly over-leveraged zones with few long positions. Luca believes that Bitcoin bulls will lose this support zone if a retest occurs, with BTC likely to drop to $60,000, which could be an effective support level at present.
At the time of writing, Bitcoin is still trading at $67,001, up 0.50% in the last day. Meanwhile, the daily trading volume of this asset dropped by 28.23% and is valued at $26.93 billion. With a market capitalization of $1.32 trillion, Bitcoin remains the world’s largest digital asset.
Featured image from Kinesis Money, chart from Tradingview
