Why is Bitcoin price down today?
The bullish momentum that propelled Bitcoin (BTC) to a 27.9% “Uptober” gain is waning on Nov. 2 as BTC lost 2% in intraday trading. Bitcoin price seemingly is overheated with BTC derivatives providing worry, even after markets reacted positively to the Federal Reserve’s Nov. 1 decision to pause interest rate hikes.
The contraction in Bitcoin price has not worried all analysts, with some believing Bitcoin is starting a bull run.
Let’s take a closer look at the factors impacting Bitcoin price today.
Bitcoin longs were liquidated
October did not disappoint thanks, in part to the liquidation of short traders, which powered Bitcoin price to a year-to-date high above $35,000.
Starting the month of November, the liquidation trend is flipping. Bitcoin long liquidations quickly spiked to over $21.1 million in a 12-hour span on Nov. 2 with over $28.2 million liquidated in the preceding 24-hours
When BTC longs are liquidated without buying pressure from traders, Bitcoin price is negatively affected. Bitcoin trading volumes are down over $7 billion from a year-to-date high set on Oct. 24 of $14.7 billion.
Related: 5,050 Bitcoin for $5 in 2009: Helsinki’s claim to crypto fame
The absence of consistent liquidity and trading volume has led some analysts to debate whether the current Bitcoin price rally has staying power.
The futures market indicates that traders also believe a pullback is coming with over 55% remaining short Bitcoin.
A record number of BTC wallets are in profit
Despite the Bitcoin price drawback on Nov. 2, a year-to-date high percentage of wallets are currently in profit. Over 81% of both short-term and long-term holders are currently in profit.
With a record number of wallets in profit, traders are still below the Oct. 24 realized profit level. Profit-taking in October was supported by an increase in trading volume, which may have helped to bolster Bitcoin price. The decrease in trading volume combined with the high amount of investors in profit may lead to Bitcoin price continuing to fall if more traders start to realize profits.
All eyes are on the spot Bitcoin ETF applications
The short-term uncertainty in the crypto market does not appear to have changed institutional investors’ long-term outlook. Despite a hostile U.S. regulatory environment, two large institutions, BlackRock and Invesco Galaxy ETF tickers are currently listed on the Depository Trust and Clearing Corporation’s (DTCC) website.
Despite the urgency of major financial firms, the SEC seems poised to continue to delay decisions on approving Bitcoin ETFs until 2024. Even with the current Bitcoin price downturn, institutional crypto funds saw their largest weekly inflow in more than a year on Oct. 30.
Related: 4 signs Bitcoin is starting its next bull run
Will short term pain in macro lead to long-term gains in crypto?
Bitcoin price continues to be directly impacted by macroeconomic events, and it is also likely that further escalation in the conflict between Israel and Hamas, regulatory actions and interest rate hikes will continue having some effect on BTC price.
Despite Federal Reserve Chairman Jerome Powell pausing interest rate increases, Bitcoin price did not immediately react positively. The pause in interest rates has led some analysts to believe Bitcoin price can surpass $35,000 by Christmas.
In the long term, market participants still expect the price of Bitcoin to recover, especially as more financial institutions are seemingly embracing BTC.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
This post has been syndicated from a third-party source. View the original article here.
