Multiple negative factors weigh heavily! Cryptocurrency market trading sentiment remains subdued as experts had warned of a 10%-15% correction risk.
Bitcoin fell for the second consecutive trading day on Tuesday, breaking below the $104,000 level and plunging 3.1% at one point to reach its lowest level since the end of June. Ethereum dropped by as much as 3.9%, and several so-called 'altcoins' also experienced similar declines. Various indicators highlight the low sentiment among cryptocurrency traders.
This decline occurred three weeks after a historic liquidation event that wiped out billions of dollars worth of leveraged cryptocurrency positions. Since then, investors appear reluctant to bet on a rebound in Bitcoin or smaller tokens.
Cryptocurrencies are facing numerous headwinds, including ETF outflows and concerns over potential sell-offs by digital asset management firms. Should Bitcoin fall further, investor attention will focus on the closely watched $100,000 threshold, which Bitcoin briefly breached only in mid-June.
In a report, market maker Keyrock stated that traders are 'reluctant to reinvest large sums.' The open interest in Bitcoin perpetual futures contracts stands at approximately $68 billion, down about 30% from its peak in October. Data from CoinGlass shows that liquidations are ongoing: selling pressure across the entire cryptocurrency market erased $1.2 billion in long positions in just the past 24 hours.
Meanwhile, investors have withdrawn more than $1.8 billion from spot ETFs tied to Bitcoin and Ethereum over the past four trading sessions.
The macroeconomic environment is similarly unfavorable. Expectations for a Federal Reserve interest rate cut in December have significantly receded, implying that a high-interest-rate environment may persist longer. Lin Tran, a market analyst at XS.com, noted that this 'increases the opportunity cost of holding non-yielding assets like Bitcoin while dampening short-term speculative momentum.'
Greater uncertainty stems from crises within the decentralized finance sector. On Monday, Balancer, an Ethereum-based decentralized finance protocol, was hacked, resulting in the theft of over $100 million in digital assets. This vulnerability is the latest in a series of bearish events over the past few weeks, leaving digital asset investors on edge.
Previously, fintech expert and co-founder of Concord Fintech Solutions, Olena Sosiedka, warned that Bitcoin would enter a 'period of adjustment and consolidation' following the rapid price surge seen between September and early October. The expert predicted: 'Clearly, Bitcoin will remain volatile in the coming weeks.'
Sociedad warns that a significant cooling of institutional interest or a shift in Fed policy could trigger a 10%-15% pullback in Bitcoin prices.
She advises: "Given the extreme sensitivity of current market sentiment, it is crucial not to chase highs but to remain calm and adopt strategic, incremental actions."
