- According to Crypto Quant researchers, Bitcoin has broken through a significant price support that may indicate an 8%–12% correction, which may send the price down to $60,000 or lower.
- According to the analyst, traders’ decision to end their basis arbitrage trades has resulted in a notable decrease in futures market activity and heightened downward pressure on bitcoin.
As the price crosses it to the downside, Bitcoin has broken through a price support level that may indicate an 8%–12% correction, according to a research released on Tuesday by CryptoQuant experts.
Given that the price of bitcoin has passed below this indicator, it may now fall toward $60,000. The researchers also noted that the price of bitcoin has dropped below the trader’s on-chain realized price of $65,800, a crucial support level in bull markets.
Even if bitcoin has dropped below this crucial level, the CryptoQuant market assessment from Tuesday suggested that downside pressure might be contained. However, there isn’t much upward momentum in the market.
Analysts at CryptoQuant also noted that traders are still holding less bitcoin and that the demand from whales, or huge holders, is still not growing. Furthermore, the liquidity of stablecoins has continued to decline, expanding at its slowest rate since November 2023.
Unwinding trades based on Bitcoin
An expert claims that the unwinding of basis trades, in which traders take advantage of the price differential between the spot market and futures contracts, is putting more downward pressure on bitcoin. The unwinding of these trades may cause a big sell-off in the spot market, which would lower the price of bitcoin.
The unwinding of the basis arbitrage trade and the withdrawal of spot bitcoin exchange-traded fund (ETF) investments, which were a component of the basis arbitrage strategy, are the causes of the collapse in bitcoin futures open interest, Bitfinex Head of Derivatives Jag Kooner said. This puts additional downward pressure on the largest digital asset by market cap.
ETF inflows that were a part of the basis trade have unwound since financing rates have become negative during this price decrease, according to Jag Kooner, Head of Derivatives at Bitfinex.
Kooner cited statistics indicating a $1.2 billion decline in the total value of existing bitcoin futures contracts on the Chicago Mercantile Exchange (CME) for the previous ten days.
Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
