Bitcoin (BTC) approached the $67,000 mark on October 26th following a series of news events that caused the BTC price to drop by nearly 5%. On Bitstamp, the price dipped to a low of $65,530 before the daily close on October 25th, according to data from Cointelegraph Markets Pro and TradingView. These price fluctuations were accompanied by geopolitical instability and unverified reports regarding the illicit use of the largest stablecoin, Tether (USDT). Although the accusations were quickly dismissed, the escalating conflict between Israel and Iran contributed to a risk-off sentiment in the market.
Despite these external factors, Bitcoin market observers identified open interest (OI) as the key driver behind the recent price performance of BTC. Luca, a popular X account, responded to the situation, stating, “Most people claim that the drop was caused by a US investigation into the USDT stablecoin, which couldn’t be further from the truth. Over the past few months, we have seen constant narratives in both bullish and bearish ranges, causing people to become emotional instead of making rational decisions.”
Data from onchain analytics firm Glassnode revealed that the single-day decrease in OI on October 25th was the largest since August. Charles Edwards, the founder of quantitative Bitcoin and digital asset fund Capriole Investments, expressed his surprise that Bitcoin still trades like a risk asset, adding, “Bitcoin will eventually trade like gold in these types of events.”
Previously, OI had reached record highs of over $40 billion as BTC/USD aimed to reach $70,000. Luca, along with others, predicted a further decline to the significant psychological support level of $60,000. Referring to the exchange order book liquidity, Luca explained, “If we examine the Liquidation-Heatmap, we can clearly see how bulls attempted to catch the local bottom throughout the week but failed each time due to highly leveraged positions.”
Monitoring resource CoinGlass displayed bid liquidity concentrated below the spot price, indicating a potential drop towards $61,500. Luca concluded, “In my opinion, we are likely to see another flush down to $60,000 before we can expect any local bottoms.”
It is important to note that this article does not provide investment advice or recommendations. Every investment and trading decision carries risks, and readers should conduct their own research before making any decisions.