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Bitcoin has fallen below $80,000, and the biggest debate in the market is whether the next level is $5,000, or whether this correction is just a temporary dip. Peter Shift has even warned that if $75,000 is broken, it could be a very long weekend for Bitcoin investors . Now don't take this very long weekend as good news.
The weekend is going on in somewhat negative terms here, and along with that comes a message from Bloomberg's Mike Magallone, who clearly said, "Don't fight the Fed." So what do these two statements mean? Why has Bitcoin fallen so much ? What specific problem do ETF investors have with this ? And what levels should be monitored going forward?
We'll cover all of this in this video today. So please watch the video with us till the end. First of all let's talk about the price. On October 26th, Bitcoin briefly dropped below $80 and reached around $926. It later recovered above $80,000. But this level has now become a very important level for the market.
Let me tell you how. Look, $80,000 isn't just a round number. This is a psychological level because investors are looking at this as a big [musical] support. Now, if an asset falls below such a level, many traders start cutting their positions. This further increases the selling of music. Now the biggest question is where did this decline come from?
The biggest reason for this was the withdrawal of money from the American Spot Bitcoin ETF. About 635.6 million were withdrawn from the N ETF on Thursday, according to data from Farside Investors. And after that, if we talk about last week Friday, then 137.9 million i.e. about 773.5 million i.e. about 77 crores went out in just two trading sessions.
This figure is also important. Why? Because spot Bitcoin ETS are funds that allow ordinary investors, wealth managers and institutions to gain exposure to Bitcoin without opening an account on a crypto exchange. Now when money comes out of these funds, the fund managers may have to sell Bitcoin . This increases the selling pressure in the market.
But keep one more thing in mind, the entire week was not negative. Last week from Monday to Wednesday, approximately $1.07 billion came into NETs. Then on Thursday, after Friday's selling, the net inflow for the entire week is left at about 301.2 million. That means the money did not run away completely but the momentum definitely reversed here.
Now let's come to Peter Sheff's warning. Chef has long been one of Bitcoin's biggest critics. He said that Bitcoin falling below $80,000 does not surprise him and the next big level could be $75,000. Now he also says that if $75,000 does n't hold, it could be a very long weekend for Bitcoin investors .
This simply means that the price decline will be long and extremely painful for investors. But there is a special point after the shift for ETF investors. See, Bitcoin is traded 24 hours a day, seven days a week. But American spot Bitcoin ETFs are listed on the stock market . Therefore they are traded only during market hours.
If Bitcoin falls on Saturday or Sunday, ETF investors cannot immediately sell their ETF shares. You have to carry it forward to Monday. He has to wait until Monday to sell it off . And that's why weekend price drops can be more risky for ETF investors . They are unable to exit immediately in panic and when the market opens on Monday of the next week, the selling pressure increases even more.
Now let's move on to another name who has made a huge statement. My name is Mike McLoone. Don't fight the fate, says Mike, senior commodity strategist at Bloomberg Intelligence. This is the biggest lesson of this quarter. According to him, high beta assets like Bitcoin, gold and copper are very sensitive to Fed policy .
If we understand it in simple language then Fed means the central bank of America. When the Fed raises interest rates or reduces liquidity, reducing the flow of cash, risky assets are pressured. Now Bitcoin is also often traded as a risky asset. So when uncertainty increases in global markets , investors first withdraw money from risky assets.
Now Magallon has provided another data point. According to him, the volatility of iShares Bitcoin Trust i.e. IBIT is almost three times that of iShares 20 Plus Year Treasury Bond ETF i.e. TLT. What this means is that price movements in Bitcoin ETFs can be much faster and more risky. He also said that the Ibit to TLT ratio is seen rolling over from its base by the end of 2024 .
Simply put, the relative strength of Bitcoin ETFs is weakening and this could be a warning signal. But McLoone isn't just talking about crashes. He is also saying that leveraged long positions in US Treasury bonds and the recent flush of short positions in Bitcoin could form the foundation for a potential move of a lifetime.
This means that so much positioning has taken place in the market that now a big reversal can also happen. This doesn't mean that the price will definitely go up. But this means that when a large number of traders in the market place bets in the same direction, a reversal can lead to a large movement.
Now let's talk a little about sentiments . The CryptoFear & Greed Index settled at 50 on October 26, which is in the neutral zone. A day earlier it was at 54. At 54, that means there is no extreme panic in the market yet. But confidence is also not as strong as before. Some Bitcoin specific trackers also showed the fear zone.
This simply means that panic is increasing among retail investors. Now, when fairness increases, short- term volatility also increases. This means that there will be a lot of fluctuations in the short term. The most important question that is facing us right now is what will happen next? The first level is $80,000 Bitcoin will have to stay above it.
Only then will there be talk of short term recovery. The second level is $82,000. Bitcoin needs to move above 80 and then $82,000 to stabilize the short-term outlook, according to the analyst. The first level to reverse on the downside is $78,000 and the next biggest level is $75,000 as highlighted by Peter Schiff.
If $75,000 is broken, market sentiment could turn quite negative. But also remember that both Schiff and Magallon have been bearish on Bitcoin in the past. Schiff has long criticized Bitcoin, and Magallon has previously talked about a severe bear market for Bitcoin . Therefore, it would not be right to consider his statement as an absolute prediction.
But understand the risk scenario . There are both possibilities in the market. Either Bitcoin will recover by reclaiming $80,000 or it will test $75,000 as ETF outflows and micro pressure increase. The biggest lesson for ordinary investors is that Bitcoin prices are n't driven solely by supply and demand.
In that, EDF flows, fate policy, global risk appetite, leverage and market sentiments all together are becoming factors in at this time and are becoming very important factors. So if you invest in Bitcoin or crypto, don't just look at price charts , look at ETF flows and micro data. And most importantly, create positions according to your risk capacity.
Because in this market, daily movements of 3 to 5% can be a normal thing. It will not be shocking news if there is a movement of 3 to 5%. So before investing, definitely take the advice of a financial advisor.
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