Inflation fears and instability in the Middle East are shaking the cryptocurrency market, bringing Bitcoin to a crucial moment.
The price of Bitcoin (BTC) suffered a 3.79% drop on Monday, closing at USD 97,276.47, amid a context of global uncertainty. Investors are attentive to the publication of the inflation data in the US, scheduled for this Wednesday, which is expected to be 2.7%, slightly exceeding the previous 2.6%. This climate is complicated by the collapse of the Syrian government, which boosted the price of oil and gold.
Bitcoin hit a low of $94,150.05, though it still held support above the 25-day and 200-day moving averages / TradingView
Inflationary expectations generate nervousness
The recent drop in the price of bitcoin occurs in an environment marked by the fall in the stock market and the focus on the US inflation data. This information is crucial, as it precedes the next meeting of the Federal Open Market Committee (FOMC) of the Federal Reserve, scheduled for December 18. Interest rate decisions are expected in this one. Currently, 85.8% of traders in the futures market are betting that the Fed will announce a rate cut of up to 4.5%.
A volatile price of bitcoin amid global uncertainty
During the day, bitcoin hit a low of USD 94,150.05, although it still held support above the 25-day and 200-day moving averages, indicating a market in an upward trend. However, its price has stabilized in a range that goes from USD 90,500 to USD 104,000 since it hit an all-time high of USD 104,088.
Trading volumes also signaled buyer activity, exceeding the 25-day average on the Binance exchange, suggesting that there is still confidence in the cryptocurrency. Despite the recent drop, open interest in Bitcoin rose to $60.49 billion, a considerable increase from $60.26 billion the day before.
Market Liquidations and Outflows
This pullback in the price of Bitcoin resulted in massive liquidations, reaching $181.79 million over the past 24 hours. Bullish traders suffered the majority of the losses, with $141.39 million liquidated, representing 77.78% of BTC long positions. Additionally, the net capital flow in the spot market was negative, with $659.63 million in outflows, while futures showed a net flow of -$3.46 billion.
However, despite the negative trend, capital flow through ETF derivatives products was $300.81 million, suggesting that some investors are still betting on a rebound.
Investor Confidence: Bitcoin Withdrawal from Exchanges
A key indicator of confidence in cryptocurrency is the continued decline in the balance of Bitcoin on exchanges. It now stands at 2.24 million BTC, compared to 2.62 million a year ago. This trend indicates that investors are withdrawing their cryptocurrencies into self-custody wallets, which is a sign of confidence in the digital asset and expectations of a higher price in the future.
As investors prepare for the release of inflation data, the immediate future of Bitcoin seems uncertain. However, investor stance and open interest in the market suggest that there is still lingering optimism among buyers.
Disclaimer: This article does not constitute investment advice. Cryptocurrency markets are volatile and thorough analysis is recommended before making investment decisions.
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