Bitcoin (BTC) hit $67,000 on October 26 after a news event caused BTC price to drop nearly 5%.
BTC/USD 1-hour chart. Source: TradingView
Bitcoin open interest is to blame as BTC price falters
Data from Cointelegraph Markets Pro and TradingView tracked Bitstamp’s local low of $65,530 through the daily close on October 25.
This comes alongside new geopolitical instability and unsubstantiated reports surrounding the illicit use of the largest stablecoin, Tether (USDT).
The conflict between Israel and Iran has heightened risk-aversion, although the latter was quick to dismiss the accusations in the Wall Street Journal.
However, for Bitcoin market observers, there has been a more important factor in recent BTC price performance: open interest (OI).
“Now most people are saying that the reason for the decline is due to some US investigation into the USDT stablecoin, which is actually far from the truth. “Over the past few months, we’ve had endless conversations that make people feel emotional every time they have to make a decision, both at the top and bottom of the spectrum.” Popular X account Luca responded to
“I think the decline was not caused by the news. This decline was caused by high OI, which market makers were trying to eliminate before pushing prices higher.”
Bitcoin futures OI 1-day change. Source: Glassnode
The daily OI decline on October 25 was the largest since August, according to data from on-chain analytics firm Glassnode.
“I am surprised that Bitcoin is still traded like a risky asset. Bitcoin will one day trade like gold in these events,” said Charles Edwards, founder of quant Bitcoin and digital asset fund Capriole Investments.
“The good thing is that the 10,000 BTC open interest disappeared in a matter of minutes. We are now back to the same level of OI as when Bitcoin was trading at $59,000.”
As Cointelegraph reported, OI previously hit an all-time high of over $40 billion as BTC/USD sought a rematch against $70,000.
Is the next $60,000 liquidity “flush”?
Luca goes on to join those predicting a new decline towards significant psychological support of $60,000.
relevant: Bitcoin Analyst: BTC Price of $100,000 by February ‘Completely Reasonable’
“If you look at the liquidation-heatmap, you can clearly observe how the bulls have been trying to capture the local bottom all week but failing every time,” the X post continued, referring to exchange order book liquidity.
“Now this is happening again, with a huge amount of buying piled up just below 65K, which is also a very important support level. Losing that exposes the next support range at 60K.”
BTC liquidation heatmap. Source: Coinglass
Monitoring resource CoinGlass found bid liquidity to be as high as $61,500, below the spot price.
“Now I personally think that will happen. We will likely see another flush to 60K before we call for a local low.” Luca concluded.
This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.