- Bitcoin price is trading on the defensive above $41,000 on Monday after a weeklong decline.
- Whales on a leading crypto exchange have closed their leveraged positions, leading to a significant increase in USDT reserve.
- Whale’s strategic moves, which ushered in a 21% decline in open interest on Bitfinex, signal that BTC price could extend losses.
Bitcoin (BTC) is struggling on Monday morning to keep its head above volatile waters, trading at $41,000, after its value fell last week. A decline in open interest by large-wallet investors (popularly known as whales), coupled with an increase of their Tether (USDT) reserves on Bitfinex, suggests that the downward trend for BTC price could extend in the short term.
Also read: Grayscale’s Bitcoin sale unlikely to have driven BTC price lower, profit taking is likely driver
Daily digest market movers: Bitcoin whales position for shift
- Crypto market participants track the moves of large wallet addresses on derivatives exchanges like Bitfinex since this helps determine the direction of BTC price, in the short term. According to CryptoQuant data, whales on Bitfinex have closed their leverage positions, and open interest in BTC has declined by nearly 21%.
Bitcoin Open Interest and price. Source: CryptoQuant
- Open interest is considered a key metric that represents the total value of open derivatives contracts. A decline in open interest suggests that investor’s confidence in BTC price decline is low.
- While Bitcoin ETFs continue to attract billions of dollars in volume, the effect is yet to be seen on BTC spot prices. Bitcoin price dropped nearly 2% in the past week and nearly 7% in the last month.
- Profit taking by whales is seen as one of the main drivers of Bitcoin’s recent price decline, analysts say.
- There is a correlation between Bitfinex open interest and Bitcoin price, which is one of the key reasons why whale movements on the derivatives exchange are important to BTC traders.
- If the Tether exchange reserves continue rising, in tandem with declining open interest, it is likely a bearish indicator for Bitcoin price. A correction in Bitcoin could follow as derivatives traders close their leveraged positions.
Technical Analysis: Bitcoin price could bleed if it fails to bounce from $41,000
Mark Cullen, a crypto analyst on X (formerly Twitter), expects Bitcoin price to bounce from $41,000 to above $44,000. However, if BTC fails to bounce from this level, Cullen predicts a correction towards $39,080.
Bitcoin price chart
Cryptocurrency prices FAQs
Token launches like Arbitrum’s ARB airdrop and Optimism OP influence demand and adoption among market participants. Listings on crypto exchanges deepen the liquidity for an asset and add new participants to an asset’s network. This is typically bullish for a digital asset.
A hack is an event in which an attacker captures a large volume of the asset from a DeFi bridge or hot wallet of an exchange or any other crypto platform via exploits, bugs or other methods. The exploiter then transfers these tokens out of the exchange platforms to ultimately sell or swap the assets for other cryptocurrencies or stablecoins. Such events often involve an en masse panic triggering a sell-off in the affected assets.
Macroeconomic events like the US Federal Reserve’s decision on interest rates influence risk assets like Bitcoin, mainly through the direct impact they have on the US Dollar. An increase in interest rate typically negatively influences Bitcoin and altcoin prices, and vice versa. If the US Dollar index declines, risk assets and associated leverage for trading gets cheaper, in turn driving crypto prices higher.
Halvings are typically considered bullish events as they slash the block reward in half for miners, constricting the supply of the asset. At consistent demand if the supply reduces, the asset’s price climbs. This has been observed in Bitcoin and Litecoin.
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