Bitcoin (BTC) Market Disturbed by Series of Troubling News Reports

The Bitcoin (BTC) market has been significantly disturbed over the last 24 hours following a series of troubling news reports.

Bitcoin (BTC) price has seen significant movements over the last 24 hours as the crypto market leader recorded notable downfalls, slipping below the $66,000 price mark. Several news events occurred during this period, including a report by the Wall Street Journal on Friday stating that Tether (USDT) is being investigated by US authorities for potential illicit use of the stablecoin in activities such as money laundering, drug trafficking, and terrorism financing.

However, one crypto analyst known on X as “Luca” has suggested that another factor may be contributing to the recent price decline in BTC, going against the narrative that the news events are solely responsible.

Bitcoin price crashed by 4% as Tether, Iran news hit markets

On Friday, a concerning report by the Wall Street Journal revealed that Tether, the company behind the world’s largest stablecoin USDT, is being investigated by US authorities.

The investigation is said to focus on whether USDT has been used to facilitate illicit activities such as money laundering, drug trafficking, and terrorism financing.

Such a damaging report on USDT, which ranks as the largest stablecoin by market capitalization, appeared to induce a bearish sentiment in the crypto market. As a result, Bitcoin price dropped to around $66,000 before a refuting statement was released by Tether’s management.

While BTC price recovered partially from this downtrend, another report emerged on Saturday morning, revealing that Israel attacked an Iranian drone factory near Kermanshah.

This incident caused a local downtrend in the Bitcoin market, forcing BTC to reach a local bottom of $65,700 with minimal price changes observed afterward.

Overall, Bitcoin price dropped by 4% from around $68,602 on Friday, showing a significant price fall as the week comes to an end.

Analyst: High Open Interest, not news, causing BTC price drop

In response to the narrative that the recent news events are causing the downtrend in Bitcoin price, one crypto analyst known on X as “Luca” had something else to say on the matter.

According to Luca, a crypto analyst on X, the recent price decline in BTC is not primarily driven by the news events as widely reported. Instead, Luca points to a high Open Interest that is dropping by 9% and indicating a highly overleveraged market.

Highlighting BTC’s recent price movements, the analyst noted that a closer look reveals the narrative being pushed by the mainstream media. In his statement:

“Bitcoin downtrend, Open Interest down 9% also, market is overleveraged as you can see. The recent rally from 59k on Oct 10 to 69k on Oct 21 was mainly driven by Perpetual contracts (futures) with little to no spot investment.”

As Luca points out, Bitcoin’s recent rally, which began around October 10 when the asset traded at below $59,000 and reached highs of around $69,000 on October 21, was largely fueled by Perpetual contracts (futures).

According to the analyst, this occurred with minimal to no investment in the spot market, setting the stage for a temporary rally followed by significant liquidations and a price reversal.

Bitcoin price headed for $60,000 next?

Further commenting on the high Open Interest in Bitcoin, Luca also noted that the Liquidation Heatmap shows massive liquidations occurring at purported support zones as these positions are highly overleveraged.

Highlighting the significance of this observation, the analyst stated that following the recent price drop, the support at $65k has several long positions liquidated. If BTC retests this level, the bulls will lose this support, and a continuation to $60k is likely, where we might see an effective support level.

At the time of writing, Bitcoin price continues to trade at $67,001 with a 0.50% gain in the last day. Meanwhile, the asset’s daily trading volume is down by 28.23% and valued at $26.93 billion. With a market cap of $1.32 trillion, Bitcoin remains the largest digital asset in the world.