Will Bitcoin’s price fall in the near future? Three reasons to expect cryptocurrency growth
Until last night, Bitcoin had been balancing around $60,000 for quite some time. This has become a new level of resistance, as the cryptocurrency has been falling sharply once it is reached. However, today’s drop in BTC to $56,766 could likely be the last opportunity to buy the major cryptocurrency cheaper. And there are at least three reasons for that theory. We tell you more about what’s going on.
It should be noted that Bitcoin did fall noticeably overnight. The local peak last night was at $60,029, but the cryptocurrency already reached a local bottom in the $56,766 area in the early hours of this morning. This was followed by a slight recovery, as a result of which BTC is now valued at 57.4 thousand.
To illustrate, here is a 15-minute chart of Bitcoin’s exchange rate, which shows the asset’s behaviour over the past 24 hours.
The 15-minute chart of Bitcoin
At the same time, the day before on Friday, Bitcoin was falling even more markedly – up to $55,600. This timeframe is shown on the hourly chart of BTC.
Bitcoin hourly chart
Analysts have studied the cryptocurrency market behavior on this collapse and concluded that the situation with Bitcoin corresponds to the norm. Well, such a slump can be considered a normal correction after reaching a new historical high of the rate at the level of $69,000. To recap, BTC hit that level on November 10.
What will happen to Bitcoin rate
Firstly, Bitcoin’s latest local drop did not result in too noticeable a succession of liquidations of long positions. According to Cointelegraph, the amount of long liquidations reached the $600 million mark last week. That’s not much – only about 2 per cent of the entire Bitcoin futures market.
The dynamics of margin liquidations in Bitcoin trading
As a reminder, a so-called liquidation cascade occurs when a drop in price leads to the forced closing of a huge number of positions opened by traders using borrowed funds from exchanges. In this case there was no mass liquidation. Accordingly, until recently, Bitcoin's rise has been driven by the spot market, i.e. regular purchases of bitcoins at market prices without leverage.
The second reason not to panic is the low difference between the volume of open positions in call options – that is, buying, and put – or selling – on Bitcoin. To recap, an option is a contract that gives the buyer of an option the right to buy an asset at a predetermined price. The dynamics of this difference are shown below in the form of percentages. At the moment, the figure is below 7 percent, which indicates that traders are neutral on this trading instrument. That is, the fall of Bitcoin has not caused pessimism among them and expectations of a further collapse of the cryptocurrency.
Difference in the volume of open positions in Bitcoin options
Finally, the third reason is that most traders who trade on leveraged exchanges continue to open long positions. In other words, they are betting that the price of BTC will rise in the near future and thus attracting outside capital to make money. The chart below shows the growing demand to borrow stackablecoins on exchanges to buy Bitcoin.
Increase in the volume of open longs in margin trading
All of the aforementioned indicators suggest that November could end on a positive note for Bitcoin. Moreover, if the level of $56,000 can indeed be considered a “new bottom”, the coming weeks will bring us another phase of the bull run, in which the price of BTC may well set a new record.
Just in case, we emphasize that it is impossible to predict anything in the cryptocurrency market. Another proof of that was the events of last night, during which Bitcoin fell quite noticeably. BTC is down 3.1 percent overnight.
Therefore, make all financial and investment decisions on your own. And do it only after thoroughly studying the market situation.
Bitcoin performance in the last hour, day and week
We think that so far the slumps in BTC and the niche coins in general do meet the definition of correction after reaching a new price high. Still, such drawdowns are necessary for growth to continue, because without them the most doubting investors will not sell the asset and thus will not get rid of sellers' pressure. It is after that other investors have confidence in the readiness of coins to move further, which makes them buy and leads BTC to growth. Therefore, there is probably no reason for investors to curse the market so far - and even despite the events of the last two weeks.
For even more useful information about the crypto market, join our Millionaire Crypto Chat. There we will discuss other developments related to decentralisation and the blockchain world in general.
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