By reaching the upper levels of its current range, Bitcoin registers a profit of 5.6% in 24 hours. BTC's price suffered a heavy loss as the implementation of its legal tender status in El Salvador became a “buy the rumor, sell the news” event.
At the time of writing, the # 1 cryptocurrency by market cap is trading at $ 46,529 with an 11.8% loss on the 7-day chart.
BTC with moderate profits in the daily chart. Source: BTCUSD Tradingview
Prior to this event, Bitcoin moved rapidly to the $ 52,000 zone. This brought the fear and greed index back to the green zone as general sentiment in the market turned bullish.
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According to a recent report from Arcane Research, the index has turned red again, back to fear levels. Bitcoin experienced a week of volatility, mostly up, but the violent bearish price action made investors fearful, as seen below.
Source: Arcane Research
Arcane Research has found that most of the action is in the derivatives industry. BTC Spot to Futures Volume indicates a decline in trading volume for the spot market.
This does not necessarily suggest an increase in trading volume for futures contracts, but a steady decline in trading in the cash over a period of 5 months, because derivatives Trade volume remains stable.
Source: Arcane Research
Like NewsBTC reported , much of the recent price action and volatility has been linked to an increase in over-leveraged positions for futures contracts. correlates with periods of bearish momentum, traRetail futures fuel the liquidation cascade that leaves the crypto market open to downside risk.
Two possible scenarios for Bitcoin as fear returns to the market
On the other hand, analyst Ben Lilly of Jarvis Labs recently reviewed Bitcoin's price action. The cryptocurrency traded in a crappy PA indicating before yesterday's sudden move up and down almost immediately.
This corresponds to an increase in liquidity around of these levels. So, Ben Lilly argued that market participants or big players try to push the price of BTC in a specific direction to grab cash and eventually run out.
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The market is currently at this stage, as seen below, "dry " short liquidity. In this case, the analyst recommended trading in the spot market, as derivatives could continue to move without a clear direction.
Source: The Kingfisher via Ben Lilly
Best case, a crab-like PA for a few weeks, as Bitcoin prepares for another new test from the $ 50,000 mark. Before that, the market could see another sweep to yesterday's low:
Worst case scenario could happen by the end of this month with a return to the previous range of BTC in the $ 30,000 in the middle of Region. Ben Lilly said:
Liquidation fractal from late 2020 to 2021. Source: Jarvis Labs via Ben Lilly