Bitcoin price declines to $64,888 amid a significant sell-off and negative financing rate post-halving, confronting volatility with $9.4B in crypto options expiring shortly.
As Bitcoin struggles to maintain its upward momentum, the cryptocurrency market is witnessing a significant sell-off, with over 40 million long positions being liquidated.
This enormous sell-off has increased anxiety among investors and analysts, leading to a deeper look into the reasons for Bitcoin’s current price reduction. By press time, the price of BTC was trading at $64,888, a decrease of 2.38% from the intra-day high.
The recent sell-off comes amidst persistent resistance faced by Bitcoin, despite its attempts to consolidate above the $66,000 mark. Moreover, technical indicators like the TD Sequential have displayed warning signals suggesting a possible Bitcoin price trajectory change.
However, analysts caution that if BTC fails to hold above its critical support level of $65,000, which it has, then it may see further selling pressure and may facilitate a more profound decline in price.
Bitcoin Funding Rate Turns Negative Post-Halving
Adding to the downward pressure on BTC is the funding rate turning negative for the first time this year, just before the recent halving event. The negative funding rate indicates that the market’s sentiment has altered towards an adverse mood when the short positions outweigh the long positions.
This occurrence is essential as it portrays the effect of the halving event on Bitcoin’s network dynamics and investor psychology. The halving of the Bitcoin block reward has already begun to effect market dynamics as indicated by derivatives data which signifies a turn toward pessimistic positions.
Regardless of Bitcoin’s current downswing, there are certain indicators that the market is looking upward again. After two days of negative funding rates, Bitcoin has experienced a rebound in its funding rate subsequent to the halving event. Moreover, aggregate open interest has surged, suggesting a rise in the favorable sentiment among market participants.
The rebound of the BTC Long/Short Ratio also affirms the optimistic bias, which signals that investors are now more bullish than pessimistic on Bitcoin.
In addition, more recent studies suggest that the last Bitcoin halving had a more favorable impact on the Bitcoin price than the previous halving, which indicates a potential prolongation of the bullish trend in the long term.
Crypto Options Expiry Adds to Market Volatility
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As BTC grapples with selling pressure and negative indicators, the impending expiry of crypto options adds another dimension of volatility to the market. Over $9.4 billion worth of crypto options, including Bitcoin and Ethereum, are scheduled to expire, potentially exacerbating price fluctuations in the short term.
The expiry date is a closely-watched factor by the market participants, as it may give additional direction to the BTC prices. The expiration of options contracts typically results in an upsurge in trading activity and escalated volatility as investors reposition their holdings.
Moreover, Arthur Hayes has weighed in on the current market trend, expressing confidence in Bitcoin’s long-term trajectory. Hayes emphasizes Bitcoin’s role as “the hardest money ever created,” citing ongoing fiat inflation as a catalyst for Bitcoin’s continued growth. He predicts an optimistic outlook for Bitcoin, encouraging investors to capitalize on opportunities presented by market declines.