Despite showing some signs of recovery earlier this week, Bitcoin (BTC) faces increased volatility as the digital asset recorded a 4% decline, dipping to $36,542, which represents a decrease of over $1,000 in a single day.
This dip came amidst a backdrop of low market liquidity above $33k, stirring concerns among investors and traders. In this recent event, approximately $21 million of BTC long positions were wiped out, a marked decrease from the $120 million tally as of right now.
Market analysts have warned of the “path of least resistance” being downwards for Bitcoin if we consider the amount of resting orders waiting to be filled. The cryptocurrency has been struggling with a repetitive price pattern, leaving the door open for both potential new highs and a deeper retracement.
The current market scenario still doesn’t rule out the possibility of another attempt at the $38k – $40k range. However, the lack of bid volume at these levels compared to the sellside liquidity building at $38,000 suggests that this may not be an easy hurdle for the digital asset to overcome.
Despite the recent downturn, there is still optimism in the market with the prospect of the first United States Bitcoin spot price exchange-traded fund (ETF). Many are viewing this as a likely catalyst for a positive price move. However, regulatory time constraints could potentially limit the impact of this development.
Meanwhile, the U.S. dollar index (DXY), was noted to be near 104, hovering near its lowest levels since early September, following a surprise drop on November 14. This macroeconomic factor could play a significant role in Bitcoin’s future performance as it has often shown an inverse correlation with the digital asset.
In parallel, traditional financial markets reacted optimistically to the Federal Reserve potentially halting rate hikes, with the Nasdaq and S&P 500 experiencing gains. However, the crypto market seemed detached from these trends, with Bitcoin and other major cryptocurrencies like Ether (ETH) facing a decline, losing the $2,000 level it had recently regained.
The imminent deadline set by the U.S. Securities and Exchange Commission (SEC) for the approval, denial, or delay of Bitcoin ETF filings by Hashdex and Franklin Templeton adds to the market’s uncertainty. Most market observers anticipate further delays, which could dampen market momentum in the short term.