The Bitcoin (BTC) market has been significantly disturbed over the past 24 hours following a series of troubling news reports. During this era, the crypto market leader has recorded notable downfalls with its price slipping below the $66,000 price mark. Nevertheless, a crypto analyst with X username Luca has postulated this recent price decline may be attributed to a different factor beyond the news events.
Bitcoin Crash Due To Overleveraged Market, Not News Event: Analyst
On Friday, the Wall Street Journal reported that Tether was under investigation by US authorities over potential illicit use of the USDT stablecoin in money laundering, drug trafficking, and terrorism amongst other crimes.
Such a dangerous report on USDT which ranks as the biggest stablecoin appeared to induce a bearish sentiment within the crypto market which caused BTC to fall to around $66,000 prior to a refuting statement by Tether’s management. While in partial recovery, reports of an Israeli attack on Iran also ignited one other downtrend forcing Bitcoin to succeed in an area bottom of $65,700. Overall, BTC’s dropped by 4% from around $68,602 on Friday.
Nevertheless, in an X post on Saturday, Luca states that the value decline was attributable to a high Open Interest quite than the supposed news events. The crypto analyst explains that amidst Bitcoin’s downtrend, Open Interest also dropped by 9% indicating the market was highly overleveraged.
In response to Luca, BTC’s recent rally from $59,000 on October tenth to $69,000 on October twenty first was driven by Perpetual contracts with little to no spot investment. Thus, the rally was at all times temporary with significant liquidations and price reversal a certainty.
Is BTC Headed To $60,000?
With reference to the high Open Interest in Bitcoin, Luca also states that the Liquidation Heatmap has shown significant liquidations to occur at purported support zones as these positions are highly overleveraged.
Following the recent price drop, the analyst highlights that $65,000, which represents a significant support level, is one in all these highly overleveraged zones with several long positions. Luca believes the Bitcoin bulls will lose this support zone if a retest occurs and BTC is prone to fall to $60,000 which can now hold as an efficient support level.
On the time of writing, Bitcoin continues to trade at $67,001 with a 0.50% gain within the last day. Meanwhile, the asset’s each day trading volume is down by 28.23% and valued at $26.93 billion. With a market cap of $1.32 trillion, Bitcoin stays the biggest digital asset on the earth.
Featured image from Kinesis Money, chart from Tradingview