Bitcoin (BTC) experienced a 7% drop in price on July 8 as it tested the $53,354 level, leading to the liquidation of $62 million in leveraged long positions. However, a surprising 7% rally to $58,215 within 8 hours caught bears off guard, resulting in the forceful termination of $96 million in short positions.
The temporary pullback of Bitcoin’s price on July 8 caught short sellers by surprise. It returned to the exact $57,200 level from 24 hours earlier. This data suggests that entities betting on a price decline used high leverage, possibly 20x or more, which caused a significant increase in open interest on July 7. However, the price increase on July 8 wiped out all the gains in open interest.
This data helps explain why BTC derivatives continue to show moderate bullishness, creating a positive outlook for reclaiming $60,000 soon.
Cryptocurrency analysts believe that the transfer of 16,308 BTC by the German government to market makers and exchanges in the past 24 hours reduced Bitcoin traders’ appetite. However, this event also provides a silver lining for bulls as half of the seized coins have already been sold, indicating a decrease in selling pressure.
According to trader and influencer RookieXBT, Bitcoin investors are likely to wait to add positions until the German government completes their sales. Additionally, the potential sell-off from the Mt. Gox bankruptcy estate after 10 years could impact the market. On the other hand, the failed FTX exchange is expected to distribute cash to investors affected by its bankruptcy, which could be used to purchase cryptocurrencies.
The analysis also touches on long-term aspects such as the United States central bank’s shift to an expansionist monetary policy and the results of the U.S. Presidential election. The ongoing stock market rally is often overlooked, despite companies holding a record $4.11 trillion in cash and equivalents.
Bitcoin derivatives show resilience, but macroeconomic conditions remain uncertain. Support for Bitcoin’s bullishness comes from the futures and options markets. Despite Bitcoin’s 11% price decline over the past seven days, the annualized premium for BTC futures has stabilized near 8% since July 7. Additionally, the current -2% skew in the Bitcoin options market reflects a healthy market sentiment, considering the approaching lowest levels in over four months.
It remains uncertain if the $55,000 support level will hold, given the fear, uncertainty, and doubt surrounding miners’ sell pressure and the potential negative impact on Bitcoin if an economic recession is confirmed.
Please note that this article is for general information purposes only and does not constitute legal or investment advice. The author’s views and opinions expressed here do not necessarily reflect those of Cointelegraph.