Bitcoin, the titan of the digital currency world with a market cap hovering around $1.9 trillion, has seen a sharp decline, going below a psychological threshold $100,000. This setback, which occurred over just three days, has left many investors and analysts questioning whether this marks the end of the current bull market or a healthy inward correction. continuous movement.
Temporary solution or reversal?
The price action has been particularly notable this week, with Bitcoin breaking through the $100,000 support level, which had been strong for eight consecutive days. Market analysts point to several factors contributing to this decline. One important effect is the strategy of market makers, who were involved in directing the price above to encourage traders to open long positions at around $98,000, thereby increasing liquidity.
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After exhausting this liquidity, market makers strategically used Federal Reserve Chairman Jerome Powell's speech as a trigger to drive a downward price movement, effectively filling in price inefficiencies at $93,744 (50%) and $90,513 (100%).
Analysts explained, “The Bitcoin fall was necessary because inefficiency was below the price that needed to be filled, which are $93,744 for 50% and $90,513 for 100%.” The inefficiency rule states that traders must make up 50% or 100% of the inefficiency.”
They said market makers “deliberately pushed the price up to encourage traders to open long positions, thereby increasing the liquidity at $98,000.” Tired market makers decided to eliminate the liquidity at $98,800 and used Powell's speech as a trigger to fuel the move down. “
Experts are now predicting a bounce to $101,000 before a pullback or continuation of the trend, as the $93,788-$92,200 range is currently acting as strong support. This area has seen large buy orders, aligning with the recently filled 50% inefficiency. A kick from this point appears inevitable.
BlackRock And Institutional Movements Signal Confidence In Bitcoin
Amid the volatility, BlackRock, one of the world's leading asset management companies, has made headlines for its substantial investments in Bitcoin. According to insights from Arkham Intelligence, BlackRock has not only bought Bitcoin while other ETFs were selling but has also accumulated a lot, now holding 122.6K BTC. This makes BlackRock the 11th largest holder of Bitcoin, controlling approximately 0.6% of the circulating supply.
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Their aggressive rally, including a recent $1.5 billion purchase, is in stark contrast to the overall market's net selling of $785 million in BTC this week. BlackRock's actions have sparked discussions on platforms like X, with many praising or jokingly noting the move from traditional assets to digital currency.
Additionally, BlackRock's involvement in the crypto market was highlighted with its BUIDL Fund receiving $100 million USDC, marking its strategic pivot towards digital assets. Such pressure in finance could interpret this move as a vote of confidence in the long-term activity of cryptocurrencies, which could affect the sentiment and dynamics of the market.
Market Sensation: Fear or Opportunity?
Current market sentiment, as measured by the Fear and Greed Index, remains in the 'greed' range at 62, indicating little fear among investors. Instead, many see the dip below $100,000 as a buying opportunity, with expectations for the future revival. Analysts predict a bounce back to around $101,000 before a pullback or continuation of the current trend, supported by strong buying at the $93,788-$92,200 range, which aligns with the recently filled 50% inefficiency level.
Featured image from iStock, chart from Tradingview.com
