While the Bitcoin price remained below the resistance level of $28,000, option volume dropped by 40 percent. The reason for the decline was recorded as low transaction volumes in the crypto market and global conflicts affecting investor sentiment.
Momentum driving Bitcoin upwards
While Bitcoin lost 9.4 percent of its value in the last 6 months, BTC fell to 27 thousand 428 dollars, gaining 66.1 percent since the beginning of the year. While the Bitcoin price appeared to maintain its upward momentum following the Grayscale court victory against the SEC, those gains completely “evaporated” as the September losing streak continued into October.
The contraction in BTC price has caused some analysts to compare the current BTC market to the pre-bull market cycle from 2015-2017, while $28,000 has become a major resistance.
40 percent drop
At the beginning of 2023, short investors constantly dominated liquidations in the futures market. The market was caught off guard when the flash crash on August 17 led to the liquidation of over $213.5 million in long positions. This marked the largest single day of Bitcoin long liquidations since the Terra Luna crash in May 2022.
Since the flash crash, the market has remained in a constant state of capital outflow from risky assets like BTC. Option volume fell 40 percent on October 9.
Bitcoin long liquidations continued in October, with $12.6 million liquidated in the 24 hours following October 9.
Bitcoin under ETF pressure
The short-term uncertainty in the crypto market has not changed the long-term perspective of institutional investors. Despite a hostile US regulatory environment, major institutions have pushed for BTC financial instruments that could trigger a bull run. Currently, it is noted that 9 major investment companies have pending ETF applications at the SEC.
Despite the urgency from major financial companies, the SEC will continue to delay decisions to approve Bitcoin ETFs until 2024, including BlackRock’s application. It has been reported that this situation may negatively affect investor sentiment and price movements in the crypto market.
While some investors speculated that BlackRock may be suppressing the Bitcoin price ahead of the eventual ETF launch, this argument remains a conspiracy as they have more to lose from the decline in BTC prices.
Despite the current Bitcoin price decline, Real Vision’s Raoul Pal emphasized that macro factors such as interest rate cuts and ETFs will trigger the next BTC bull run.
On the other hand, it was noted that when BTC long positions were liquidated without investor buying pressure, the Bitcoin price was negatively affected. Bitcoin trading volumes also continued to decline, with Binance losing market share for the seventh month after it halted zero-fee trading.
The lack of consistent liquidity and trading volume has led some analysts to describe BTC price behavior as illiquid and volatile.
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