The Bitcoin futures markets took a beating overnight with liquidations of future contracts surpassing $1 billion, market sentiment remains quite neutral. A short-lived bitcoin rally to the new records high of $61,923 descends below $55,000 on Monday morning. The digital gold fell as low as $54,588.83 making a small bounce to $56,689. The picture for the future markets is even bleaker.
Greed is Driving the Price Up and Liquidation Sinks the Market
Analysts are suggesting multiple scenarios behind the dump.
According to Justin Barlow, the research analyst at cryptocurrency data provider,
“The TIE, a large deposit of roughly 18,000 BTC worth over $1 billion dollars was made to a hot wallet of cryptocurrency exchange Gemini”, “suggesting that an institutional holder may have been taking profits or exiting the market.”
Jan & Yann, cofounder of Glassnode tweeted that “There were $500 million liquidations of Bitcoin long positions, bets that the price would go up – in one hour. That was the most that have ever been liquidated, according to Glass node. The founders chalked up the massive losses due to excess greed in the system.”
From the reports of Bybt, losses were north of $1 billion. According to the Fear and Greed Index, such substantial losses have an impact on market sentiment. Taking a closer look at the market measurement, we find that sentiment has pulled back into the neutral category. Suggesting investors wait and observe the broader picture of Bitcoin surges and pullback if something larger is afoot.
Bitcoin Futures Investors Can Still be Cheerful
Having a look at what’s happening on Wall Street, crypto investors have reasons to be cheerful. The Dow Jones industrial average, a price-weighted average of 30 blue-chip stocks that are generally the leaders in their industry, rose over 100 points. Also, the S&P 500 index touched new highs. The rose let economists upgrade their expectations for the broader US economy.
Fed Chair Jerome Powell, 16th chair of the Federal Reserve, hints about central banks considering growing concern about the moves in the bond market, and the economy that could overheat.