The Bitcoin market is facing turbulence as US economic data defies expectations.
On Friday, Bitcoin experienced a 2.20% drop, with its price hitting lows of $65,596.29 on Binance. Bitcoin's open interest (OI) plunged 3.39% to $37.98 billion, after hitting record highs this week. US economic data shows a resilient economy, suggesting a potential tightening of monetary policy by the Federal Reserve.
Despite the pullback, Bitcoin is still trading above the EMA25 and EMA50 exponential moving averages / TradingView
Falling Open Interest and Its Impact on Bitcoin Price
Bitcoin, currently trading at $66,698.33, suffered a significant drop this week. According to data from Coinglass, open interest, which measures the capital risked by speculators through derivatives, decreased 3.39% to $37.98 billion. This phenomenon typically occurs when bitcoin holders take advantage of high prices to take profits in the spot market.
The net flow in the spot market was negative over the past 24 hours, with outflows of $259.02 million. This suggests that many investors are choosing to withdraw capital in response to market fluctuations.
US economic factors influence the market
Recent US economic data indicate a robust economy. Durable goods orders, both core and total, exceeded expectations. Core orders rose 0.4% versus the expectation of a 0.1% decline, while total orders contracted just 0.8% instead of the expected 1.1%. This data suggests that US companies are investing in equipment and machinery, which could influence the Federal Reserve's future decisions on interest rates.
The negative correlation between the US dollar and cryptocurrencies is a crucial factor. A strong dollar tends to weaken Bitcoin, which is reflected in the recent strength of the DXY index, which closed at 104.31 points.
Bitcoin short- and long-term outlook
Despite the pullback, Bitcoin is still trading above the EMA25 and EMA50 exponential moving averages, indicating a possible short-term uptrend. These averages, located above the EMA200, suggest that Bitcoin still has the potential to reach new all-time highs.
However, the 25-day average of trading volume is declining, from 26,111 to 24,052 coins traded, indicating a weakening of the bulls. The liquidation zone above $70,000 remains a significant hurdle.
Bitcoin's decline reflects both the inherent volatility of the cryptocurrency market and the influence of global economic factors. With the upcoming Federal Reserve meeting on the horizon, investors will be closely watching any changes in monetary policy that may impact the market.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Readers are advised to conduct their own research before making any investments.