With the volatility of the last week, BTC open interest has decreased.
The exchange warns that the future prospects are uncertain.
Although bitcoin (BTC) has shown momentum the last five days, it has yet to recover the prices it had a week ago near $66,000 (USD). However, this is not necessarily a negative thing for the market.
“BTC is experiencing a healthy pullback, but the outlook is uncertain,” considers cryptoasset exchange Bitfinex in a report published on October 7. This explains that last week’s sales were exacerbated by the escalation of geopolitical tensions between Iran and Israel, which intensified risk reduction.
The price of bitcoin reached at least USD 59,000 last week. With its fall to such a level, a wave of liquidations was triggered in the futures market of positions that were investing for an increase. This is something that, In the short term, it suggests greater calm for the priceaccording to the exchange.
Bitcoin recorded, with such a panorama, its first series of four red days for the first time since early August. That, according to analysts at the exchange, means that “the market experienced a healthy realignment, with open interest (OI) falling from overheated levels above $35 billion to $31.8 billion.
“This reduction in OI suggests that market conditions are relatively stabilized, with the risk of sudden price movements now lower,” he warns. It should be noted that this acronym refers to the capital invested in the futures market, which can be seen in the graph below.
In fact, since then, the price has shown a recovery, motivated by the better than expected US employment report. Likewise, the altcoin market, in correlation with the stock market, reacted upward.
However, Bitfinex clarifies that “it is still too early to draw definitive conclusions about the short-term market direction.” “As the market continues to react, clues to the future direction of BTC and the market in general may lie in the positioning seen at the beginning of the week, particularly in the United States,” he adds.
The economy shows signs of strength that favor the markets
US labor market data showed September saw the largest job gain in six months. These also indicated that monthly unemployment fell from 4.2% to 4.1%. For the exchange, this reflects a resilient economywhich stimulates the markets.
However, Bitfinex emphasizes that, although the workforce remains strong, other sectors have not yet felt the benefit of monetary policy easing. As an example, he points to the manufacturing sector that perceives lower demand compared to a year ago.
As reported by CriptoNoticias, with such labor market results, expectations of an interest rate cut of 50 basis points in November were dispelled. The vast majority now foresee a reduction of 25 basis points, after the decrease made last month for the first time in more than four years.
Interest rate cuts increase the liquidity available to markets, even though they demonstrate the need to boost the economy. Therefore, this policy tends to generate greater investment in assets, which May benefit risk demand if geopolitical and economic fears do not grow.