- Bitcoin price nosedived to a low of $38,555 on Tuesday prior to a comeback above $40,000 earlier today.
- BTC price drop triggered $82.93 million liquidations in futures market, over $55 million long positions were liquidated.
- Expert ties recent Bitcoin price decline to GBTC redemptions by bankruptcy estates such as FTX.
Bitcoin price slipped to a low of $38,555 on Binance, early on Tuesday. The crypto market bloodbath saw an increase in selling pressure on BTC, driving prices lower. BTC climbed back above the psychologically important level of $40,000 on Wednesday.
The asset’s price decline triggered a liquidation of $55.52 million in long positions and $27.42 million in short positions.
Also read: Bitcoin price recovery likely after BTC dips below $40,000, according to on-chain metrics
Daily Digest Market Movers: Bitcoin price drop triggers cascading liquidations in derivatives market
- Bitcoin price closed Tuesday at $38,555, noting a steep decline from the psychologically important level of $40,000.
- BTC suffered a setback alongside other large market capitalization assets in the market-wide correction.
- Bitcoin’s price drop catalyzed massive liquidations in the derivatives market.
- Experts believe that the recent decline in Bitcoin price is a result of GBTC redemptions by bankrupt crypto exchange FTX.
- Vijay Boyapati, author and crypto expert, argues that Bitcoin ETF approval by the SEC opened the floodgates to BTC price drop.
- Boyapati notes that bankruptcy estates such as FTX have redeemed their GBTC. The expert believes bankrupt firms like FTX hold GBTC that is directly tied to Digital Currency Group CEO Barry Silbert’s actions.
- Silbert is the CEO of the parent company of Grayscale and in an effort to boost assets under management at the giant, the executive paid firms back with GBTC instead of Bitcoin.
- The DCG owes BTC to several firms that were paid back in Grayscale BTC shares, these institutions are coming forward to liquidate their GBTC holdings and pull out their capital.
- Boyapati notes that Barry Silbert is currently being investigated by several regulatory bodies and law enforcement agencies in the US.
1/ The reason for #Bitcoin‘s recent drop in price, despite the ETF floodgates being opened, is directly related to GBTC redemptions by bankruptcy estates such as FTX.
And the reason GBTC is held by so many companies in bankruptcy is directly tied to the fraud by @BarrySilbert
— Vijay Boyapati (@real_vijay) January 23, 2024
- Bitcoin price is likely to suffer a steeper decline if GBTC suffers outflows in large volumes.
- The other catalyst ushering a decline in Bitcoin price is profit-taking activities by whales.
Technical Analysis: Bitcoin price suffers setback to $38,555, likely to dip to support zone
Bitcoin price dipped into the support zone between $38,398 and $40,249, on Tuesday. While BTC made a comeback above the $40,250 level on Wednesday, it is likely that Bitcoin falls back to the support zone where 1.29 million addresses scooped up 727,310 BTC tokens.
BTC/USDT 1-day chart
A daily candlestick close in the bearish imbalance zone between $40,000 and $41,466 is likely to invalidate the thesis of further correction in BTC. In the event of a rally, Bitcoin price faces resistance at $41,466, and $43,074.
Cryptocurrency metrics FAQs
The developer or creator of each cryptocurrency decides on the total number of tokens that can be minted or issued. Only a certain number of these assets can be minted by mining, staking or other mechanisms. This is defined by the algorithm of the underlying blockchain technology. Since its inception, a total of 19,445,656 BTCs have been mined, which is the circulating supply of Bitcoin. On the other hand, circulating supply can also be decreased via actions such as burning tokens, or mistakenly sending assets to addresses of other incompatible blockchains.
Market capitalization is the result of multiplying the circulating supply of a certain asset by the asset’s current market value. For Bitcoin, the market capitalization at the beginning of August 2023 is above $570 billion, which is the result of the more than 19 million BTC in circulation multiplied by the Bitcoin price around $29,600.
Trading volume refers to the total number of tokens for a specific asset that has been transacted or exchanged between buyers and sellers within set trading hours, for example, 24 hours. It is used to gauge market sentiment, this metric combines all volumes on centralized exchanges and decentralized exchanges. Increasing trading volume often denotes the demand for a certain asset as more people are buying and selling the cryptocurrency.
Funding rates are a concept designed to encourage traders to take positions and ensure perpetual contract prices match spot markets. It defines a mechanism by exchanges to ensure that future prices and index prices periodic payments regularly converge. When the funding rate is positive, the price of the perpetual contract is higher than the mark price. This means traders who are bullish and have opened long positions pay traders who are in short positions. On the other hand, a negative funding rate means perpetual prices are below the mark price, and hence traders with short positions pay traders who have opened long positions.
https://www.fxstreet.com/cryptocurrencies/news/bitcoin-tumbles-below-39-000-on-tuesday-btc-price-drop-triggers-8293-million-in-liquidations-202401240600
