Bitcoin wrapped up this past Thanksgiving night with a bloody trading session. The first crypto by market cap was rejected as it made its way to $60,000 and has dropped over 6% in the 24-hour chart. As of press time, BTC trades at $54,084 but seems at risk of further downside.
Related Reading | New COVID Variant FUD Drives Bitcoin Down To $54k
Besides Bitcoin, the traditional finance market took a hefty dive on news of a recently discovered COVID-19 variant in Africa. This wrack havoc across many sectors with the S&P 500 and DOW Jones recording an almost 3% loss in the past 24 hours.
As 2020 and 2021 have shown, Bitcoin shows a high correlation with traditional markets during periods of macroeconomic development. Thus, one of the reasons the benchmark crypto has been trending to the downside as investors could fear a new phase of lockdown across the world to prevent the alleged new variant from spreading.
The U.S. Dollar as measured by the DXY Index has also taken a dive with a 0.71% loss in the 24-hour chart. The currency was showing significant strength since November 10th, when the U.S. Federal Reserve hinted at the beginning of tapering but was rejected at the 97-price mark.
The U.S. dollar rally has been attributed as one of the reasons Bitcoin display weaknesses in the past week. A rejection at these levels could provide BTC’s price with some relief allowing it to make a more convincing rally into $60,000 and uncharted territory if it’s able to prevent more downside in the short term.
The positives of today's selloff:
1. It's clearing out the weak hands/excess leverage
2. The $DXY is dropping back below its channel top
— Justin Bennett (@JustinBennettFX) November 26, 2021
Bitcoin One Step Closer To New Highs?
As NewsBTC has been reporting during this week, the key for Bitcoin to resume its bullish momentum could be found in the derivatives and futures market. This sector has been overheated during November as traders expected BTC to quickly push beyond $70,000.
Related Reading | Whales Fill Up On Bitcoin While Broader Market Panics
Funding rates across exchanges, even as Bitcoin continued to retest critical support and saw an increase in selling pressure, was high. In addition, data shared by pseudonym analyst Byzantine General suggested that the total Open Interest across the market barely moved with the recent downside price action suggesting there is still some leverage to be purged from the market.
Still barely flinched lmao.
And the market is now relatively speaking more leveraged up. pic.twitter.com/1AVPh9oOR5
— ₿yzantinΞ General (@ByzGeneral) November 26, 2021
As of press time, funding rates across exchanges are finally beginning to flip negative but remain positive in two major exchanges: Bybit and Binance, the latter has turned more neutral in the past hour. Still, some more pain could come as BTC head into the weekend.