30s Summary

Bitcoin’s price has dropped by 3% and past patterns suggest a further decline to $60,000 may be imminent. The dip created a ‘bearish engulfing’ pattern that often signals a price drop. This decline could be compounded by concerns over a lack of spot buyers and Bitcoin’s futures and derivatives market. Also, in October, Bitcoin failed to go beyond $70,000, leading to large investors minimising exposure to Bitcoin ETFs. However, between October 10 and 22, a substantial $2.6 billion was invested in Bitcoin ETFs.

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The price of Bitcoin (BTC) has fallen by 3% after a good showing last week. This drop, alongside a certain pattern that often suggests a downturn, has folks worrying that Bitcoin could fall back to the $60,000 mark.

On October 21st, Bitcoin’s 2.4% dip created what’s known as a ‘bearish engulfing pattern’. This tends to signal either a short-term or long-term drop in price, and has a success rate of 60-70%, depending on other market factors.

In the last seven months, each time this pattern has shown up, it’s been followed by a hefty drop in Bitcoin’s price – the dips got deeper each time, with the price even dropping by as much as 26% between July 29 and August 5.

One big worry for Bitcoin comes from some past events that have directly affected prices. Bitcoin’s futures and derivatives market has played a major role in its recent price changes, with open interest (basically, the total number of outstanding derivative contracts, like futures and options, that have not been settled) in Bitcoin passing the $40 billion mark as the price soared to $69,000.

However, something called a negative spot orderbook CVD is still a problem for Bitcoin. This shows a lack of ‘spot buyers’ (people buying Bitcoin on the spot rather than using futures or options) on exchanges. According to the charts, when there’s high open interest, negative spot CVD, and a bearish engulfing pattern, Bitcoin usually ends up losing value.

Considering this, and how Bitcoin has dropped in the past when similar factors lined up, it wouldn’t be out of place to see Bitcoin fall to $60,000.

On October 21, with Bitcoin failing to break the $70,000 mark, big-money Bitcoin investors seem to have backed off a bit. This can be seen in how US-based Bitcoin ETFs (Exchange-Traded Funds) were pulled out to the tune of $79.1 million on October 22.

Before this, the last time Bitcoin ETFs saw a net outflow was on October 10, when $81.1 million were taken out.

However, between October 10 and October 22, a massive $2.6 billion was put into Bitcoin ETFs, reaching an all-time high of $65 billion in total assets under management.

The current lull might be a sign that some big players are deciding to wait a bit, especially as Bitcoin is having trouble breaking a key resistance level.

Remember that this isn’t professional investment advice – always do your own research before deciding to invest or trade.

Source: Cointelegraph