- Bitcoin price nosedived to a low of $38,555 on Tuesday prior to a comeback above $40,000 earlier today.
- BTC price drop triggered $82.93 million liquidations in futures market, over $55 million long positions were liquidated.
- Expert ties recent Bitcoin price decline to GBTC redemptions by bankruptcy estates such as FTX.
Bitcoin price slipped to a low of $38,555 on Binance, early on Tuesday. The crypto market bloodbath saw an increase in selling pressure on BTC, driving prices lower. BTC climbed back above the psychologically important level of $40,000 on Wednesday.
The asset’s price decline triggered a liquidation of $55.52 million in long positions and $27.42 million in short positions.
Also read: Bitcoin price recovery likely after BTC dips below $40,000, according to on-chain metrics
Daily Digest Market Movers: Bitcoin price drop triggers cascading liquidations in derivatives market
- Bitcoin price closed Tuesday at $38,555, noting a steep decline from the psychologically important level of $40,000.
- BTC suffered a setback alongside other large market capitalization assets in the market-wide correction.
- Bitcoin’s price drop catalyzed massive liquidations in the derivatives market.
- Experts believe that the recent decline in Bitcoin price is a result of GBTC redemptions by bankrupt crypto exchange FTX.
- Vijay Boyapati, author and crypto expert, argues that Bitcoin ETF approval by the SEC opened the floodgates to BTC price drop.
- Boyapati notes that bankruptcy estates such as FTX have redeemed their GBTC. The expert believes bankrupt firms like FTX hold GBTC that is directly tied to Digital Currency Group CEO Barry Silbert’s actions.
- Silbert is the CEO of the parent company of Grayscale and in an effort to boost assets under management at the giant, the executive paid firms back with GBTC instead of Bitcoin.
- The DCG owes BTC to several firms that were paid back in Grayscale BTC shares, these institutions are coming forward to liquidate their GBTC holdings and pull out their capital.
- Boyapati notes that Barry Silbert is currently being investigated by several regulatory bodies and law enforcement agencies in the US.
1/ The reason for #Bitcoin's recent drop in price, despite the ETF floodgates being opened, is directly related to GBTC redemptions by bankruptcy estates such as FTX.
— Vijay Boyapati (@real_vijay) January 23, 2024
And the reason GBTC is held by so many companies in bankruptcy is directly tied to the fraud by @BarrySilbert
- Bitcoin price is likely to suffer a steeper decline if GBTC suffers outflows in large volumes.
- The other catalyst ushering a decline in Bitcoin price is profit-taking activities by whales.
Technical Analysis: Bitcoin price suffers setback to $38,555, likely to dip to support zone
Bitcoin price dipped into the support zone between $38,398 and $40,249, on Tuesday. While BTC made a comeback above the $40,250 level on Wednesday, it is likely that Bitcoin falls back to the support zone where 1.29 million addresses scooped up 727,310 BTC tokens.
BTC/USDT 1-day chart
A daily candlestick close in the bearish imbalance zone between $40,000 and $41,466 is likely to invalidate the thesis of further correction in BTC. In the event of a rally, Bitcoin price faces resistance at $41,466, and $43,074.
Cryptocurrency prices FAQs
How do new token launches or listings affect cryptocurrency prices?
Token launches like Arbitrum’s ARB airdrop and Optimism OP influence demand and adoption among market participants. Listings on crypto exchanges deepen the liquidity for an asset and add new participants to an asset’s network. This is typically bullish for a digital asset.
How do hacks affect cryptocurrency prices?
A hack is an event in which an attacker captures a large volume of the asset from a DeFi bridge or hot wallet of an exchange or any other crypto platform via exploits, bugs or other methods. The exploiter then transfers these tokens out of the exchange platforms to ultimately sell or swap the assets for other cryptocurrencies or stablecoins. Such events often involve an en masse panic triggering a sell-off in the affected assets.
How do macroeconomic releases and events affect cryptocurrency prices?
Macroeconomic events like the US Federal Reserve’s decision on interest rates influence risk assets like Bitcoin, mainly through the direct impact they have on the US Dollar. An increase in interest rate typically negatively influences Bitcoin and altcoin prices, and vice versa. If the US Dollar index declines, risk assets and associated leverage for trading gets cheaper, in turn driving crypto prices higher.
How do major crypto upgrades like halvings, hard forks affect cryptocurrency prices?
Halvings are typically considered bullish events as they slash the block reward in half for miners, constricting the supply of the asset. At consistent demand if the supply reduces, the asset’s price climbs. This has been observed in Bitcoin and Litecoin.
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