The bullish momentum that had driven Bitcoin (BTC) to a 31.8% 30-day rally weakened on November 14, despite weaker-than-expected US inflation data showing a 3.2% annual increase. Bitcoin price seemed overheated, nearing $100 million. Even after traditional markets reacted positively to monthly inflation, they were liquidated within an hour.
The decline in the price of Bitcoin has not worried all analysts, with some believing that Bitcoin is starting to rise to $48,000.
Today we will take a closer look at the factors that affect the price of Bitcoin.
$126 million worth of Bitcoin purchases were liquidated.
The rapid movement in the Bitcoin futures market appears to be the main reason why the price has fallen so quickly today. Bitcoin buy liquidations quickly surged to more than $97.9 million in one hour on November 14, with more than $126.3 million liquidated in the previous 24 hours.
If BTC purchases are liquidated without buying pressure from traders, this will have a negative impact on the Bitcoin price. Bitcoin trading volume is down more than $7 billion from the November peak set at $13 billion on November 9.
Related: EXCLUSIVE: Two years after John McAfee’s death, his widow Janice is broke and needs answers.
The lack of consistent liquidity and trading volume has led some analysts to debate whether the current Bitcoin price rally is sustainable. Bitcoin can recover quickly if there is a change in liquidity.
$BTC the first half
I think it’s pretty straightforward from here on out.Approved for less than $34.7K ~ seeking low liquidity
Accept more than $36.3K ~ Seek higher liquidityorder book level
$34K ~ Bid depth increases
$38K ~ Request depth gets thicker.HTF level
$38,000
$32,000 pic.twitter.com/9zN2bJV8gg— Skew Δ(@52kskew) November 14, 2023
Futures markets indicate that traders also believe a downturn is coming, with over 54% selling Bitcoin.
A record number of BTC wallets are making profits.
Despite the Bitcoin price drop on November 14th, the highest annual percentage of profitable wallets was reached on November 11th. Currently, over 83% of short and long term holders are making a profit.
With a record number of wallets taking profits, traders are still below their October 24 realized profit levels, but the uptick is matched by a decline in prices. Profit taking in October was supported by increased trading volume, which may have helped push Bitcoin prices higher. The combination of lower trading volume and a large number of profit investors could cause the price of Bitcoin to continue to fall as more traders begin to realize profits.
All eyes are on Bitcoin ETF applications.
Short-term uncertainty in the cryptocurrency market does not appear to have changed the long-term outlook of institutional investors. Despite the hostile U.S. regulatory environment, two large institutions, BlackRock and Invesco Galaxy, have registered exchange-traded fund (ETF) offerings on the Depository Trust and Clearing Corporation website.
Despite the urgency of major financial companies, the Securities and Exchange Commission appears poised. BlackRock recently cited USD Coin (USDC) and Tether (USDT) to the SEC as potential risks to the price of Bitcoin.
Related: Bitcoin rebounded from $36.2K lows as CPI inflation slowed more than expected.
The price of Bitcoin continues to be directly affected by macroeconomic events, and additional regulatory actions, ETF news, and rising interest rates will likely continue to impact the price of BTC.
Bitcoin price did not immediately respond positively despite Federal Reserve Chairman Jerome Powell pausing interest rate hikes. The disruption in interest rates and funding rates has led some analysts to believe that the Bitcoin price will soon reach $69,000.
In the long term, market participants still expect the Bitcoin price to recover, especially as more financial institutions appear to be accepting BTC.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. All investing and trading activities involve risk and you should do your own research when making any decisions.