Bitcoin (BTC) hovered around the $67,000 mark on October 26th following a series of events that caused a nearly 5% drop in its price.
Bitcoin open interest was blamed for the price instability, with data from Cointelegraph Markets Pro and TradingView showing that BTC reached a low of $65,530 on Bitstamp by the end of the day on October 25th.
These events coincided with geopolitical instability and unverified reports about the illicit use of the largest stablecoin, Tether (USDT).
Although the accusations, which were published in the Wall Street Journal, were quickly dismissed, the risk-off sentiment increased due to the conflict between Israel and Iran.
However, Bitcoin market observers identified open interest (OI) as the key factor in the recent price performance of BTC.
“Some people claim that the drop was caused by a US investigation into the USDT stablecoin, but that couldn’t be further from the truth. Over the past few months, we have seen various narratives that have caused people to become emotional and make decisions based on both the high and low ranges,” popular X account Luca responded.
Data from onchain analytics firm Glassnode showed that the single-day decrease in OI on October 25th was the largest since August.
“It’s mind-boggling that Bitcoin still trades like a risky asset. One day, Bitcoin will trade like Gold during these events,” commented Charles Edwards, the founder of quantitative Bitcoin and digital asset fund Capriole Investments.
As previously reported, OI had reached record highs of over $40 billion as BTC/USD approached $70,000.
Luca also predicted a further drop in price towards the psychologically significant support level of $60,000.
“If we look at the Liquidation-Heatmap, we can clearly see that bulls have been trying to catch the local bottom all week, but they have failed each time due to highly leveraged positions,” the X post explained, referring to the liquidity of exchange order books.
Monitoring resource CoinGlass showed that bid liquidity was stacked below the spot price towards $61,500.
“That’s what I personally believe will happen. We will most likely see another drop to $60,000 before we can expect any local bottoms,” Luca concluded.
Please note that this article does not provide investment advice or recommendations. All investment and trading decisions involve risks, and readers should conduct their own research before making any decisions.
BTC price experiences 5 decline as Bitcoins potential to drop to 60K remains a concern