Bitcoin ETF Launch Leads to Market Correction, Analysts Predict Leverage Flush
Following the launch of spot Bitcoin ETFs, the crypto market is experiencing a correction as analysts had predicted. However, there are concerns that a Bitcoin leverage flush out on major exchanges could lead to further price drops.
Binance Royal Flush
A crypto commentator known as ‘MartyParty’ predicted a Binance ‘Royal Flush’ before the Bitcoin halving. This refers to a significant drop in price that would clear all long positions since December 4, resulting in a 20% correction.
During the previous halving cycle, Bitcoin markets experienced a 50% correction due to the pandemic. However, 30% pullbacks are common and could send BTC prices back to $32,800, clearing all longs since October.
‘MartyParty’ believes this drop would create opportunities for new long positions and spot entries into Bitcoin and altcoins.
The Impact of Leverage Flush-Outs
In crypto markets, leverage flush-outs are common occurrences where over-leveraged trades need to be cleared from the system for normal trading conditions to resume.
One difference in this cycle is the presence of spot Bitcoin ETF issuers who may defend certain price levels, such as $40k or even the previous flush wick at $41,500.
Bearish Weekly Candle?
An analyst known as “CrediBULL Crypto” examined the bearish weekly candle close but argued that zooming out reveals a more bullish picture. Similar candle patterns in the past were mistakenly seen as the end of an uptrend when they were actually part of a larger uptrend.
At present, BTC is trading at around $42,700 following a dip to $41,750 during early Asian trading. The asset has been consolidating around this level after the ETF-driven pump to $48,500 last week.
Hot Take: Bitcoin Correction Continues as Leverage Flush-Out Looms
The launch of spot Bitcoin ETFs has triggered a market correction, as expected. However, analysts are now concerned about a potential Bitcoin leverage flush-out on major exchanges, which could cause prices to drop even further. Speculators who have built up over-leveraged trades may need to exit the market for normal trading conditions to resume.
An analyst predicted a Binance ‘Royal Flush’ before the Bitcoin halving, which would result in a 20% correction and clear all long positions since December 4. This drop could potentially send BTC prices back to $32,800, clearing all longs since October. However, it could also create opportunities for new long positions and spot entries into Bitcoin and altcoins.
As the correction continues, there is uncertainty about how spot Bitcoin ETF issuers will defend certain price levels. Additionally, while the weekly candle appears bearish in isolation, zooming out reveals a more bullish picture.
Overall, the crypto market is navigating through a period of correction and potential leverage flush-outs as investors and traders adjust their positions.
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