Bitcoin Faces Temporary Slump, Yet Analysts Forecast Potential Rally Towards $48,000
Summary:
Despite Bitcoin's recent dip following a year-over-year inflation increase of 3.2% in the US, many analysts remain optimistic about a potential rally towards $48,000. A sudden downturn in Bitcoin futures market resulted in liquidations but also raised speculation about the sustainability of the current price trend. However, increased liquidity could provide a quick recovery. A potential price decrease is also being predicted due to a large number of investors realizing profits. Regardless of short-term fluctuations, institutional investors and market observers continue to express confidence in Bitcoin's long-term price recovery.
Although the year-over-year inflation data from the United States, which reports a rise of 3.2%, fell short of anticipations, the optimistic momentum driving Bitcoin (BTC) to a 30-day increase of 31.8% started subsiding on Nov. 14. Even as the standard market responded favorably to the stagnant monthly inflation rates, Bitcoin's value seemed overextended, leading to an almost $100 million liquidation in just one hour. Nevertheless, the dip in Bitcoin's price hasn't raised concerns amongst all market observers, some of whom predict a rally towards the $48,000 level. Let's delve deeper into the factors contributing to Bitcoin's current market scenario.
A sudden movement in the Bitcoin futures market is primarily responsible for the rapid downturn in its price today. Over $97.9 million worth of Bitcoin long liquidations occurred within a mere hour on Nov. 14, following the $126.3 million liquidated over the previous 24 hours. The liquidation of BTC longs without corresponding buying pressure from traders may be detrimental to Bitcoin's price. Bitcoin trading volumes have shrunk by over $7 billion from a November apex recorded on Nov. 9, totaling $13 billion.
Some market analysts have speculated on the sustainability of the current Bitcoin price ascendance due to irregular liquidity and trading volume. If the liquidity level increases, Bitcoin could experience expedited recovery. Moreover, more than half—54%—of futures market traders expect a downturn, thereby staying short on Bitcoin.
In spite of the pullback on Nov. 14, a peak proportion of profitable wallets was registered on Nov. 11 for the year, with over 83% of short and long-term holders reporting profits. Yet, the level of realized profit trails that of Oct. 24, despite aligning with the current devaluation. October's profit taking, aided by increased trading volume, might have bolstered Bitcoin value. The trading volume's decrease combined with a considerable number of investors realizing profits could signal a continued downtrend in Bitcoin's price.
The short-term market ambiguity in cryptocurrency doesn't seem to impact institutional investors' long-haul viewpoint. Despite regulatory pressures in the U.S., titans such as BlackRock and Invesco Galaxy ETF listings are displayed on the Depository Trust and Clearing Corporation's (DTCC) website. Meanwhile, the SEC appears to postpone the approval decisions on Bitcoin ETFs into 2024, despite pressure from leading financial organizations.
Bitcoin's price remains sensitive to macroeconomic events and might be impacted by further regulatory measures, ETF news, and interest rate fluctuations. Even though Federal Reserve Chairman Jerome Powell has paused interest rate hikes, Bitcoin's price didn't show an immediate positive response. Some market observers, noting the halt in interest rate increases and the funding ratio, foresee Bitcoin soaring to $69,000 soon. In the more extended run, a price recovery seems likely as more financial establishments are seemingly leaning towards Bitcoin. As with any investment and trading activity, potential investors should conduct their due diligence before making any decisions.
Published At
11/14/2023 8:59:41 PM
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