Bitcoin's price has dipped below the $62,000 mark due to risk aversion ahead of a Federal Reserve policy statement. Traders are cutting positions amid geopolitical tensions and market concerns.
In recent trading sessions, Bitcoin (BTC) experienced a significant pullback, settling around $62,000 after briefly reaching above $64,000 earlier in the week. This downturn was influenced by several factors including rising oil prices due to escalating tensions between the U.S. and Iran, as well as broader market risk aversion ahead of key Federal Reserve (Fed) announcements.
The sell-off in semiconductor and AI stocks also contributed to the overall market sentiment, with notable declines seen across Asian markets following profit-taking from Samsung. The Fed’s minutes released on Wednesday offered little clarity but maintained a 73% chance that rates would remain unchanged at their next meeting scheduled for July 29.
Bitcoin's trading dynamics reflected these changes in risk appetite. According to Hyblock data, the cumulative volume delta (CVD) showed initial buying as futures CVD added around $585 million and spot CVD nearly $119 million on Monday. However, by Wednesday, this trend had reversed with significant sell-offs from both futures ($497 million) and spot markets ($86 million), indicating a shift towards risk reduction.
The funding rate for Bitcoin also declined, signaling traders’ desire to cut positions. While the overall positive funding rates remained intact over the week, liquidations were mostly on the long side, with $47 million in forced selling compared to just $4 million from short positions. This suggests that if prices trade down towards the $61,000 level, there could be additional pressure due to concentrated long positions.
The broader market sentiment remains cautious as reflected by the Crypto Fear & Greed index, currently indicating a 'fear' category. Despite bulls making attempts to absorb dips below $60,000 and fresh inflows from spot markets and ETF buying, the rally continues to be driven primarily by futures activity.
Additionally, Strategy’s recent sale of 3,588 BTC at prices above its current average cost has raised concerns among investors. This could lead to increased selling pressure if Bitcoin remains below this level for an extended period.
Source: Cointelegraph. Summarized and rewritten by the Vexoda Newsroom. This is market news, not financial advice.