The bitcoin (btc) market has been significantly disrupted over the past 24 hours following a series of worrying news. During this period, the cryptocurrency market leader has recorded notable declines and its price fell below the $66,000 price mark. However, a crypto analyst with the username x, Luca, has postulated that this recent price drop can be attributed to another factor beyond the news.
bitcoin Drop Due to Overleveraged Market, Not News Event: Analyst
On Friday, the Wall Street Journal reported that Tether was being investigated by US authorities for possible illicit use of the USDT stablecoin in money laundering, drug trafficking and terrorism, among other crimes.
Such a damaging report on USDT, which ranks as the largest stablecoin, appeared to induce bearish sentiment in the cryptocurrency market, causing btc to fall to around $66,000 before a rebuttal statement from management. of Tether. While in partial recovery, reports of an Israeli attack on Iran also triggered another downtrend that forced bitcoin to hit a local bottom of $65,700. Overall, btc fell 4% from around $68,602 on Friday.
However, in a x.com/MirageMogul/status/1850075515496923146″ target=”_blank” rel=”noopener nofollow”>x publication On Saturday, Luca claims that the price drop was due to high open interest and not the supposed news. The crypto analyst explains that amid bitcoin's downtrend, open interest also fell by 9%, indicating that the market was highly overleveraged.
According to Luca, btc's recent rally from $59,000 on October 10 to $69,000 on October 21 was driven by perpetual contracts with little to no spot investment. Therefore, the rally was always temporary, with major sell-offs and a certain price reversal.
Is btc heading to $60,000?
Regarding the high open interest in bitcoin, Luca also states that the liquidation heat map has shown that significant liquidations are occurring in supposed support zones, as these positions are highly overleveraged.
Following the recent price drop, the analyst highlights that $65,000, which represents an important support level, is one of these highly overleveraged areas with several long positions. Luca believes that bitcoin bulls will lose this support zone if a retest occurs and btc is likely to fall to $60,000, which can now hold as an effective support level.
At the time of writing, bitcoin continues to trade at $67,001 with a gain of 0.50% in the last day. Meanwhile, the asset's daily trading volume has decreased 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 of Kinesis Money, Tradingview chart
