Why Are Bitcoin Traders Worried About ‘Terrible’ BTC Price Crash?
Bitcoin's 11% weekly gain has some traders worried that the market may witness one last rally before BTC continues its rally to new all-time highs.
Bitcoin may be at risk of long liquidity
“The trading activity around 68.4k is linked to past volatility since July 29, when the price dropped to 49k five days later,” said anonymous derivatives trader TheKingfisher on October 17 at X.
The recent increase in Bitcoin (BTC) volatility shows that “hedging is becoming more expensive, and leverage is becoming more expensive” as volatility increases, the analyst wrote.
“Even traders using 50x leverage who bought above have not been canceled yet, and the price is 67,350,” said The Kingfisher, adding that “there is a 62.48% chance of release within 24 hours.”
Moreover, The Kingfisher highlighted that the liquidity pool is widening and when this happens, a “Darth Maul Candle” type of exit is likely to occur.
“Falling to 61.3k would be painful.”
Bitcoin liquidity map. Source: The Kingfisher
Meanwhile, MN Capital founder Michael Van de Pop shared similar sentiments, stating that Bitcoin is following the same pattern it has been in for the past seven months.
Van de Pop shared the following chart on X Post showing Bitcoin's recent run above $68,000, which saw the bulls take supply-side liquidity around $65,000.
According to the chart, Bitcoin price may decline first to collect the demand-side liquidity towards $64,130 before another leg out.
“I think we're going to correct a little bit with the last correction and then push to a new all-time high starting next week.”
BTC/USD 12-hour chart. Source: Michael Van de Pop
Additionally, the recent increase in Bitcoin Futures open interest (OI) has some analysts worried about a potential pullback to exit long positions.
On October 16, CME Bitcoin futures OIA hit an all-time high of 179,745 BTC, which is currently worth an estimated $1.2 billion, according to K33 Research Senior Analyst Vettel Lunde.
Since October 10, open demand has increased by 32,440 BTC – and active market participants will drive this growth, seeing a weekly growth of 40% exposure.”
CME Bitcoin Future OI. Source: K33 Research
Related: Ethereum price declines often follow ETH open interest peaks – will history repeat itself?
What if an increase in OI means a higher price for BTC?
Still, not all analysts agree that an increase in OIN is a prerequisite for a major price correction.
Anonymous Bitcoin trader Wick said in OI that recent spikes in CME Bitcoin futures to all-time highs “signal more bullishness” in the largest cryptocurrency by market capitalization.
For crypto futures and information platform CoinGlass, the increase in Bitcoin futures OIA “signals significant price movement in the future.
Source: CoinGlass
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
