Why Trapped Longs At Bitcoin ATH Could Lead To More Downside

Best Owie

1 year ago

3 mins read

Picture of a bull caught in a mouse trap

Reason to trust

Strict editorial policy that focuses on accuracy, relevance, and impartiality

Created by industry experts and meticulously reviewed

The highest standards in reporting and publishing

How Our News is Made

Strict editorial policy that focuses on accuracy, relevance, and impartiality

Ad discliamer

Morbi pretium leo et nisl aliquam mollis. Quisque arcu lorem, ultricies quis pellentesque nec, ullamcorper eu odio.

Bitcoin’s new all-time high this month has led to a number of interesting developments in the crypto space. The success of the first Bitcoin ETF contributed greatly to the price of BTC finally bursting through the $67K price point and with it has come to a spike in funding rates in the market. The ProShares ETF saw over $1 billion in trading volume in its first day, signaling increased inflows into the market.

The spike in funding rates moved along with the price movements of BTC in the month of October. This spike maintained momentum along with BTC movements. However, as the price of bitcoin has begun a downward trend, funding rates have also evened out to mid-October levels.

Bitcoin Open Interest Spikes

Open interest in bitcoin had recorded a significant spike when the price of the digital asset had moved past $67K. BTC-denominated open interest in perpetuals had since a sharp increase to the tune of 15,000 when the asset reached its new all-time high in October. The spike in BTC-dominated perpetuals had risen past levels recorded during the April all-time high.

The increased interest from big money is credited for the spike in the funding rates recorded last week. More specifically short-term traders expected the value of the digital asset to continue to grow and break past $70K. Funding rates have shown similar movements to the futures market in recent times.

Funding rates for BTC spikes in October | Source: Arcane Research

Arcane Research put forward that this increase in open interest and increased funding rates could point to leveraged long-trades currently in the all-time high range. If this is so, then this is something to keep an eye on if the price of the digital asset continues to decline in the coming days.

Big Money Moving Into The Market

Institutional inflows also saw record volumes following the all-time high breakout last week. A CoinShares report showed that bitcoin saw inflows of up to $1.45 billion in the past week alone. Most of this volume came from trading in the ProShares ETF that debuted on Tuesday last week. An additional $138 million flowed into BTC products in other regions.

BTC price falls below $59,000 | Source: BTCUSD on TradingView.com

Sentiment on Wall Street is beginning to turn in favor of the top cryptocurrency in the market. Data showed that the number of Wall Street brokers interested in the BTC and the market had spiked from 5% at the beginning of the year to 15% presently who say that they are starting to make investments in BTC more seriously.

Market sentiment overall remains positive with the all-time high run of the previous week. However, declining prices have led investors down a more cautious path when trading in the cryptocurrency. Bitcoin’s price touched $58K in the early hours of Wednesday ahead of market opening for midweek trading.

Featured image from iStock, charts from Arcane Research and TradingView.com

Best Owie

Best Owie is a seasoned managing editor with a wealth of experience currently serving as the Managing Editor at NewsBTC. Best is a highly skilled professional with a track record of producing engaging and informative content. With a keen eye for detail and a passion for accuracy, Best is committed to ensuring that each article published meets the highest standards of quality.

Best has over six years of experience in the crypto industry and has overseen the creation and publishing of thousands of articles over the years. Best is always abreast of everything that is going on in the crypto industry in order to create and curate the most relevant content for readers. This shines through in Best’s publications, which are always clear and concise, enabling easy reading and understanding for all.

Best is also an avid learner and advocate for new technology. This has seen Best dive into topics in areas such as decentralized finance (DeFi), non-fungible tokens (NFTs), Layer 2 blockchains, etc. In addition to this, Best is a vocal member of the crypto community across various social media platforms such as X and Reddit. Best’s work garners tens of thousands of readers monthly, who rely on the information in these publications to keep up-to-date with everything happening in the crypto community.

Best’s articles explore breaking news, intricate systems such as yield farming, liquidity pools, and other decentralized finance (DeFi) systems. This is because Best understands the importance of information to gaining financial freedom and believes that everyone should have access to this information.

Best also believes in leveraging the blockchain for philanthropy to create the most positive social impact. This involves work with charitable organizations focused on financial literacy and education. With each article, Best lends a voice to important issues such as a more financially inclusive future, transparent systems for growth and development, and technology that is not self-serving but one that serves all of humanity.

When not curating engaging content, Best can be found reading a book with a cup of hot chocolate, enjoying a Netflix series, or exploring the outdoors with Green - the world’s most quiet and well-behaved Husky. Best’s interests also span other industries such as art, finance, and security, attending seminars and conferences in not just the crypto industry but other industries as well.

As an animal lover, Best is also involved with charities for animals, local shelters, and rescues. Best is also involved in local events that promote inclusivity, such as being a prominent member of hiking clubs and a cycling club, as well as being a part of a very happy group of animal lovers.

Best is a true professional in every sense of the word, with an exceptional dedication to producing high-quality work. This shines through in Best's work on and off the clock. These include advocating for inclusive crypto education for all, the impact of financial illiteracy, and the benefits of adopting new technologies such as cryptocurrencies. Best’s prolific career in the media industry is a testament of how hard work and dedication pays.

Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.