In the wake of the recent Wall Street opening on November 2, Bitcoin (BTC) experienced a 3.5% price dip, breaking below the $35,000 mark. This decline came after Bitcoin hit an 18-month high of $35,968 on Bitstamp, propelled by the encouraging remarks from Jerome Powell, the Chair of the United States Federal Reserve, hinting at a potential halt in interest rate hikes.
However, the celebratory momentum was short-lived as market analysts and traders expressed growing concerns over the “overheated” state of Bitcoin derivatives markets.
Charles Edwards, the founder of Capriole Investments, highlighted that all segments of the Bitcoin derivatives markets, including Perpetuals, Futures, and Options, are currently overheated. This sentiment was echoed by popular trader Skew, emphasizing that the onus now falls on the spot markets to uphold Bitcoin’s price strength.
The cooling down of the derivatives fervor comes amidst warnings from market monitoring resources about potential liquidity “rug pulls” which could further exacerbate the price volatility.
Material Indicators, a market monitoring resource, urged for caution in the current trading environment, underlining the fleeting nature of support levels which could dissipate rapidly, posing a significant risk to market participants.
The support levels at the time of writing were observed at both $34,000 and $33,500. The recent market dynamics underscore the delicate interplay between spot and derivatives markets in influencing Bitcoin’s price trajectory, and the need for investors to tread cautiously amidst a turbulent trading landscape.
Meanwhile, other cryptocurrencies have shown varied performance. Ethereum (ETH) followed Bitcoin’s trend with a slight dip of 0.63%, putting its price at $1,808. In contrast, Ripple (XRP) saw an increase of 0.52%, closing at $0.61. Binance Coin (BNB) and Cardano (ADA) also experienced growth of 2.77% and 2.87% respectively, with BNB standing at $230 and ADA at $0.306. Solana (SOL) also marked an increase of 0.97%, with its price now at $42.