All news

Bitcoin recovered after extensive drop – Is $24k next level or will it fall to $14k?

Posted on by admin
bitcoin g7b40b5e89 1920 1200x600 1
14
Oct
  • After falling over 4 percent after the CPI inflation release, Bitcoin witnessed a massive short covering.
  • The overall sentiment remains bearish as the Bitcoin futures premium has stayed under 1 percent over the last month.

The world’s largest cryptocurrency Bitcoin (BTC) has exhibited strong volatility in the last 24 hours post the release of U.S. Inflation data for September last month. The Consumer Price Index showed that inflation in the U.S. jumped 0.6 percent in September over the previous month.

This was enough to cause an instant reaction in the price of Bitcoin and the broader cryptocurrency market. Within three hours of the inflation data release, the BTC price tanked 4.4 percent making a low of $18,175. This abrupt drop caused more than $55 million in Bitcoin futures liquidations across derivative exchanges, the largest number in three weeks.

However, the recent price dip didn’t last for very long. In hours after the price drop, Bitcoin registered a significant bounceback moving back all the way closer to $20,000. As of press time, BTC is trading 3.1 percent up at a price of $19,611 and a market cap of $376 billion. As a result, investors have seen massive volatility on both sides in the last 24 hours.

Soon as the inflation data came out, traders shorted Bitcoin and altcoins heavily but were caught off-guard in the hours following that. On-chain data provider Santiment explained:

Traders shorted #Bitcoin & #altcoins heavily as #inflation news broke. When $BTC hit a 3-week high short vs. long exchange ratio at 2pm UTC, prices reversed course & began rising, & many betting against #crypto got liquidated. Prices move toward the crowd’s least expectation.

Bitcoin BTC Short Covering scaled

Courtesy: Santiment

Where’s Bitcoin heading next – $14K or $24K?

Many analysts have suggested that in the times to come, Bitcoin is heading for greater volatility. However, no one is ready to tell in which direction the ball will swing. If we observe closely, Bitcoin’s short covering yesterday came after the U.S. equity indices made a soli move upwards despite the inflation data.

On Thursday, the Dow Jones Industrial Average and other indices rallied a solid 2 percent in a single day putting Wall Street on a roll. Since Bitcoin shares a close correlation with the U.S. equities it too followed the queue. If Bitcoin fails to hold $19,000 on a daily closing, Bitcoin could be seen heading to $16,900 first and later to $14,000. Cici Lu, chief executive officer of Venn Link Partners Pte told Bloomberg:

I still don’t think we will have a bullish run anytime soon. All it takes is one piece of negative news to do with regulation and we could break through the bottom end of Bitcoin’s recent $19,000 to $24,000 trading range.

Also, Bitcoin derivative traders have remained neutral to bearish. Over the past month, the Bitcoin futures premium has stayed under 1 percent. Historically during all the previous bear markets, Bitcoin hasn’t performed well in October.

Also, data from Santiment shows that the social discussions around Bitcoin are very low for any price recovery to happen. The on-chain data provider noted: “Traders are chasing short-term pumps right now to salvage losses. Weak hands dropped out of #crypto in 2022, & long-term traders are waiting for #Bitcoin to begin receiving the spotlight again. When $BTC social dominance is high, prices typically rise.”

admin