Bitcoin (BTC) Futures Wiped Out $44 Million Amid Volatile Trade
In a volatile trading session on Monday, Bitcoin (BTC) futures positions worth over $44 million were liquidated. The spot price of the largest cryptocurrency by market capitalization swung more than $1000, fluctuating between session lows around $26,400 and new highs for the month around $27,400. Currently, BTC is trading in the $26,700s, up close to 1% for the day. The price action does not have any specific news stories or fundamental catalysts behind it.
One possible factor contributing to the pullback in BTC price could be a filing from an auditor of Binance.US. The auditor expressed difficulty in verifying Binance’s collateralization of assets at times, which might have caused some jitters and weighed on sentiment. However, two factors underpinning the price action are expectations for an interest rate hold from the US Federal Reserve later this week and technical buying.
According to coinglass.com, out of the $44 million in futures position liquidations on Monday, approximately $32 million were short positions. This marked the biggest wipeout of Bitcoin bears since last Monday when the BTC price briefly dropped below $25,000. While Bitcoin’s price outlook worsened in August after falling below its uptrend and 200DMA, it has recently found support at its 21DMA and a downtrend that has been in play since early August.
Bitcoin’s Price Outlook and Key Resistance Levels
Since breaking above its recent downtrend and 21DMA, Bitcoin’s outlook has improved. It seems to have established a new range between $25,000 and $28,000ish. However, to retest yearly highs, Bitcoin needs to break above key resistance in the $27,700-$28,500 area.
Where Next for the Bitcoin (BTC) Price?
The macroeconomic factors are likely to play a significant role in determining Bitcoin’s price this week. The US Federal Reserve is expected to hold interest rates on Wednesday but may leave room for another rate hike later this year. Traders will closely examine the central bank’s new economic forecasts and dot plot summary of interest rate projections to assess the probability of future rate hikes in 2023 and potential rate cuts in 2024.
While most investors do not anticipate another rate hike this year, the possibility mentioned by the Fed is preventing markets from getting too excited about pricing rate cuts in 2024 and beyond. This helps keep US yields and the US dollar supported. Given Bitcoin’s historically negative correlation with the US dollar and yields, it is likely to remain within its recent multi-month range of $25,000-$28,000 unless there is a significant reversal in the US dollar and yields.
Hot Take: Bitcoin Faces Consolidation Amidst Uncertain Macro Environment
In a volatile trading session, Bitcoin futures worth over $44 million were liquidated. The cryptocurrency swung more than $1000 between session lows and new monthly highs. While no specific news or catalysts drove the price action, expectations for a US Federal Reserve interest rate hold and technical buying contributed to the market sentiment. Despite the recent wipeout of short positions, Bitcoin’s price outlook has improved after finding support at key levels. However, breaking above resistance at $27,700-$28,500 is crucial for a retest of yearly highs. Looking ahead, macroeconomic factors will play a vital role as the Federal Reserve releases economic forecasts and interest rate projections. Bitcoin’s price may remain within its recent range unless there is a significant change in the US dollar and yields.
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