According to a report from Bloomberg, Donald Trump is gearing up to intensify military measures against Iran following the elections in both the US and Israel. The article emphasized Trump’s indications that military actions might recommence after the midterm elections set for November 3rd.
Market analysts are expressing concerns that go beyond just military implications of a potential conflict. Energy supply risks have a direct consequence on oil prices, and rising oil costs can elevate inflation expectations. Such developments could keep interest rates high for an extended duration, posing challenges for volatile assets like Bitcoin trying to recover.
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Weak Demand Signals from the US Market
The level of demand to match sales figures raises concerns. The Coinbase Bitcoin Premium Index, as provided by CoinGlass, has stayed in the negative zone for 31 consecutive days, with the current figure around minus 0.13 percent.
This index measures the Bitcoin price on Coinbase against that on Binance. A negative reading indicates that Bitcoin is trading lower on Coinbase, where transactions are conducted in US dollars. This suggests either weaker buyer interest or heightened selling pressure within the US market, in comparison to international markets.
The sustained negative trend of this index, coupled with Bitcoin’s fall below the $80,000 support, underscores a lack of robust demand to counteract the asset’s decline.
In a post on X today, crypto analyst Ted Pillows noted that both Bitcoin and Ethereum faced selling pressure as the week wrapped up with low liquidity.
Pillows highlighted that liquidity issues significantly affect price movements, as insufficient buyers in the market mean sell orders can be executed at lower prices. Additionally, the liquidation of leveraged positions can amplify these price shifts.
Investor Yi Lihua discussed broader challenges in a post today, asserting that the cryptocurrency market is currently experiencing a downturn, while the AI sector attracts substantial investment and talent. Yi retained an optimistic view regarding the overall trajectory but emphasized the necessity for patience.
As prices dropped, investors anticipating a rebound began closing their positions. Recent data from CoinGlass indicates around $828.28 million in liquidations over the last 24 hours, with $698.51 million stemming from long positions and $129.77 million from shorts.
In just the last four hours, close to $430 million was liquidated, with long positions accounting for $404 million. This means that 94% of liquidations during this timeframe were from trades expecting upward momentum.
The decline in Bitcoin has extended to other significant cryptocurrencies; Ethereum has slipped below $2,300, and Solana has fallen below $100. The market’s immediate focus is now whether Bitcoin can regain the $80,000 mark.
*This does not constitute investment advice.