On October 26, 2024, Bitcoin (BTC) hovered around $67,000 after experiencing a nearly 5% decline. The price dipped to local lows of $65,530 on Bitstamp, reflecting broader market concerns driven by geopolitical instability and unverified reports regarding the illicit use of Tether (USDT), the largest stablecoin.
The recent downturn in Bitcoin’s price coincided with rising tensions in the Middle East, particularly between Israel and Iran, which contributed to a risk-off sentiment among investors. Additionally, allegations regarding Tether’s involvement in illicit activities surfaced in a Wall Street Journal article, although these claims were quickly dismissed by market participants.
Analysts have pointed to open interest as a more significant factor influencing Bitcoin’s price movement. Notably, a popular account on X (formerly Twitter), operated by crypto analyst Luca, stated that the price drop was not primarily due to news but rather the high open interest levels that market makers are attempting to flush out before driving prices higher.
Data from on-chain analytics firm Glassnode indicated that the single-day decrease in open interest on October 25 was the largest since August. This suggests that traders are adjusting their positions in response to market conditions.
Charles Edwards, founder of Capriole Investments, remarked on the ongoing volatility: “Blows my mind that Bitcoin still trades like a risk asset. Bitcoin will trade like Gold in these events one day.” He noted that approximately 10,000 BTC in open interest was wiped out within minutes, bringing levels back to where Bitcoin was trading around $59,000.
Market observers are closely monitoring support levels as they anticipate further price movements. Luca highlighted significant liquidity below the current spot price, indicating that if Bitcoin fails to hold above $65,000, it could test the next psychological support level at $60,000.
The liquidation heatmap shows a substantial concentration of long positions just under $65K. Should this support level breached, it could trigger additional selling pressure and expose the market to further declines.
As of now, Bitcoin is trading at approximately $67,094, reflecting a slight recovery from its earlier lows. Despite this dip, Bitcoin has seen notable inflows into spot ETFs recently, with over $402 million reported as of October 25. However, the overall market sentiment remains bearish as many altcoins also experience declines in value.
The broader cryptocurrency market has witnessed a decline of about 2.48%, with total market capitalization resting at approximately $2.27 trillion. Major altcoins such as Ethereum (ETH), Solana (SOL), and XRP have also reported losses ranging from 3% to 6% over the past day.