Bitcoin Retracement Leads to Liquidation of Leveraged Positions
Bitcoin’s price has experienced a slight retracement from its peak above $35,000 this week, resulting in the liquidation of over $147 million in leveraged positions within the past 24 hours, according to data from Coinglass. Short positions were hit harder, with nearly $80 million liquidated compared to just over $68 million in long positions. The 30-day bitcoin volatility index increased to over 2% on Wednesday.
Bitcoin’s Price and Market Capitalization
At 1:00 p.m. ET on Wednesday, the price of the world’s largest cryptocurrency remained relatively stable at $34,522. Meanwhile, the global cryptocurrency market capitalization rose by 2% to reach $1.31 trillion within the last 24 hours, as reported by CoinGecko.
Full Retrace Unlikely, Spot Bitcoin ETF Approval Expected
CoinShares Research Associate Luke Nolan expressed confidence in Bitcoin’s resilience despite the retracement. He believes that a complete retrace of the price is unlikely unless there is a decline in the spot bitcoin ETF narrative. Nolan anticipates that an ETF will likely be approved by early 2024, although he acknowledges the possibility of new reasons for rejection from the SEC.
Supportive Factors for Bitcoin’s Upward Trajectory
Nolan highlighted European ETP inflows as a factor supporting Bitcoin’s ongoing upward trajectory. He noted positive funding rates and traders positioning themselves long in anticipation of likely approval and subsequent flows. Additionally, he mentioned that while bitcoin exhibits some characteristics of a market hedge like gold, its recent movement is primarily driven by the spot ETF narrative.
Hot Take: Bitcoin Retraces Slightly, but Supportive Factors Remain
Despite a minor retracement in its price, Bitcoin continues to demonstrate resilience and is supported by factors such as the potential approval of a spot bitcoin ETF. The liquidation of leveraged positions highlights the volatility of the market, particularly for short positions. However, with positive funding rates and European ETP inflows, Bitcoin’s upward trajectory is expected to persist. While uncertainties remain, such as the possibility of SEC rejection, the overall sentiment remains optimistic for the digital asset.
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