Bitcoin is stable at spot rateslooking development on the daily chart. However, the downtrend remains and the price action remains within a bearish breakout formation. This forecast follows the September 7 dump, which saw the world’s most expensive coin fall, approaching the all-important $50,000 round number.
Growing Leveraged Positions in Bitcoin
From a technical perspective, the downtrend remains, especially if the bulls fail to recoup the losses of September 7. From a trade-off perspective, the trend that began on September 7 will shape the short-term outlook, possibly accelerating the decline below the August lows.
Amid these developments, one network analyst notes that there has been a massive accumulation of leveraged positions since March 2024. While it remains unclear which direction prices will move, the current state of affairs means that sellers have the upper hand.
If the bulls prevail, it would be a huge boost for BTC bulls who have had to contend with steep losses over the past three months. Regardless of the direction, this leverage buildup is a precursor to a period of heightened volatility in the coming days.
While Bitcoin is falling, sentiment has taken a hit, which explains the decline in trading volume over the past two weeks. Since late August, BTC has fallen from around $66,000, down nearly 20% from last week’s lows.
At the same time, volatility is relatively low and not much different from the situation when BTC rose sharply from late February and then updated historical highs in mid-March 2024.
The average financing rate is optimistic. Will this change?
Interestingly, despite the lower lows, the trading data shows that the average funding rate on derivatives exchanges has remained positive for more than a year.
This development could be due to a change in price dynamics that has seen the world’s most valuable coin emerge from a slump, rallying since late Q3 2023. The recovery has seen BTC shake off weakness and surge to over $70,000 after losses in 2022 that saw the coin drop to $15,800.
For bulls to dominate the derivatives market, prices must rebound steadily. A break above $66,000 and the July highs would likely spur demand, lifting the coin above multi-month resistance at $72,000.
However, for that to happen, there must be inflows to find the Bitcoin ETF. The price drop has accelerated the outflows from this product, which means institutions are playing it safe. So far, SosoValue shows outflows of more than $169 million for spot bitcoin ETF issuers in the United States.
