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A Potential BTC Price Dip: Why are Bitcoin Traders Worried?

Bitcoin traders are currently concerned about a potential price drop despite recent gains. Crypto analysts predict that Bitcoin may experience a “corrective move” before a larger rally in late 2024. Traders worry that the current price increase could lead to a temporary retracement before reaching new highs. 

Bitcoin price chart showing potential dip and trader concerns over liquidation risks
Source: https://decrypt.co/238798/bitcoin-dips-below-55000-significant-selling-expected-months-ahead

Liquidation Risk 

One reason for concern is the risk of Bitcoin long liquidations. According to a trader known as TheKingfisher, the recent volatility has made hedging more expensive, and leverage is becoming costly. Traders using high leverage are especially at risk.  

The current price of Bitcoin is around $68,400, and traders who bought in at this level with 50x leverage haven’t been liquidated yet. However, TheKingfisher estimates that there is a 62.48% chance of liquidation within 24 hours. 

Additionally, the trader pointed out that the growing liquidity pool could trigger what is called a “Darth Maul candle.” This term refers to sudden and sharp price movements, which could lead to rapid liquidations. 

Chart Patterns and Market Sentiment 

Another popular voice in the crypto sphere, Michael van de Poppe, agrees that Bitcoin may take up a similar posture seen in the past seven months. He shared a chart that had Bitcoin’s recent rally above $68000. Van de Poppe said Bitcoin could dip to about $64130 to “suck in demand-side liquidity,” after which the asset would push upwards again. 

What adds to the intrigue, though, is the surge in Bitcoin futures open interest. Yesterday, on Oct 16, CME Bitcoin futures reached an all-time high in OI at 179,745 BTC, worth approximately $1.2 billion. According to some analysts, this could, in fact, lead to a pullback in prices that would force traders with long positions to close their positions. 

Mixed Views on Open Interest 

Not all traders see the rising open interest as a negative signal. A Bitcoin trader known as Wicked has a more optimistic outlook. Wicked believes the increase in OI is a sign of bullish momentum. This sentiment is echoed by CoinGlass, a platform that tracks crypto futures. According to CoinGlass, the rise in futures OI indicates that a significant price movement is on the horizon, and it could push prices higher rather than lead to a pullback. 

Key Concerns at a Glance: 

Concern 

Description 

Liquidation Risk 

High leverage traders at risk of liquidation as volatility increases. 

Market Pattern 

Bitcoin may drop to collect liquidity before moving higher. 

Open Interest 

Surge in Bitcoin futures OI could indicate a price drop, but opinions differ. 

Bitcoin traders remain cautious as they navigate potential risks. While some fear a price drop, others believe the market could continue its bullish run. 

October 17, 2024 at 6:00 pm

Updated October 17, 2024 at 6:00 pm

Disclaimer

Remember, investing in cryptocurrencies involves risks, and it’s important to conduct thorough research and seek professional advice before making any financial decisions. (Please keep in mind that this post is solely for informative purposes and should not be construed as financial or investment advice.)

FAQ

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Best practices for crypto investment include research, diversification, investing what you can afford to lose, and avoiding hype-driven investments.

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