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Bitcoin value’s recent nearly 10% drop, which sent the cryptocurrency down to the $60,000 support level, is being viewed as a necessary correction by analysts at crypto exchange Bitfinex.
In a report published on October 6, the analysts described this dip as a “healthy realignment” that could help stabilize Bitcoin’s price in the near future. According to the report, several critical technical factors suggest a reduced risk of sudden price swings in the coming days and weeks.
Background
On September 27, Bitcoin hit a high of $66,600, but market optimism quickly evaporated due to increasing geopolitical tensions in the Middle East and growing concerns about the U.S. economy.
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This triggered a decline, with Bitcoin falling nearly 10% from its peak to its lowest point on October 4. Bitfinex noted that this shift in sentiment among spot investors highlights a more cautious approach at higher price levels, signaling that buyers might consolidate their positions at lower prices.
Market Sees Massive Liquidations
The drop in Bitcoin’s value also led to a noticeable reduction in open interest, with the figure shrinking from $35 billion to a more stable $31.8 billion, according to the report. Additionally, more than $450 million worth of long positions were liquidated on October 1, showing that the market was heavily skewed toward leveraged bets on Bitcoin’s upward movement.
Bitfinex analysts pointed out that these liquidations, relative to the scale of the price decline, indicate a long-biased sentiment among traders, particularly as Bitcoin approached the $65,000 mark.
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Despite the recent dip, the report suggests that positive U.S. labor data and expectations of further Federal Reserve rate cuts in November could reignite optimism for riskier assets like Bitcoin. However, the analysts cautioned that it’s still too early to make firm predictions about Bitcoin’s short-term direction, adding that upcoming U.S. trading sessions could provide crucial signals.
Looking Ahead: What to Expect
As Bitcoin rebounded to $62,650, the return of “spot buying aggression” has been observed, signaling renewed interest among investors. Still, Bitfinex analysts emphasized that the market remains highly reactionary, and the next few weeks could be key to understanding Bitcoin’s trajectory.
