Over the last two days, the world’s largest cryptocurrency increased to $34,800 from $31,000 before reversing course and declining the majority of these gains. This $3,800 fall might not seem important, but the 12% oscillation liquidated $660m worth of futures contracts.
On January 25, President Joe Biden voices his willingness to lower the $1.9 trillion stimulus package. Significantly, this might have reduced incentives for those buying Bitcoin as inflation protection or a hedge against U.S. dollar devaluation versus leading global currencies.
Bitcoin resumed declining as big investors sold off their positions. The world’s largest cryptocurrency logged a 24-hour high and low of $32,939.54 and $30,875.63, respectively. Still, it was trading higher by 0.52% at $31,768 on Wednesday.
The dominant cryptocurrency has declined by 4% after reaching the $35,000 level on Monday. The price of Bitcoin dropped to $30,875 and then recovered to over $32,000. According to Ashish Singhal (chief executive officer and co-founder, CoinSwitch Kuber, cryptocurrency investment platform), many holders and whales have sold off their positions.
Furthermore, shorter-term charts might not reflect Bitcoin’s bullishness. It is essential to note that several derivatives signs and the top traders’ flow leaves an expectation of sub-$30,000 prices.
The dominant cryptocurrency has been testing the $30,800 support, but bulls have shown aggressive buying activity below that level. Moreover, MicroStrategy and Marathon Patent Group have recently announced sizeable acquisitions.
Respondents listed Bitcoin to be in the extreme bubble zone
According to data, the top traders at OKEx have been heavily buying the dip. The futures contracts premium does not reflect excessive leverage from consumers.
Furthermore, the second-largest cryptocurrency in terms of market cap, Ethereum was trading marginally at $1,310.09. However, other major cryptocurrencies such as stellar, ripple and tether declined.
Cryptocurrencies have come under pressure in recent times notwithstanding interest from big financial institutions, for example, BlackRock and Goldman Sachs.
According to a recent survey led by the financial services major Deutsche Bank, respondents listed BTC in the extreme bubble zone.
Six hundred twenty-seven global market professionals managed the survey throughout 13-15 January. The market professionals were asked to identify bubbles in the international markets on a scale of 0-10, with ten meaning ‘extreme bubble’.
Notably, Bitcoin got 8.7, while U.S. technology stocks came in second with a score of 7.9 and European government bonds got 6.2