Bitcoin price weakness is likely to continue until risk off mood peaks

The key takeaways

• Bitcoin fell as weakness in the tech industry spilled over into crypto markets. Risk appetite was reduced and demand for bullish leverage decreased.

• The downward pressure was exacerbated by the persistent spot Bitcoin ETF sales and the targeted selling of a 2011 owner.

BitcoinBTC() has fallen 11% from Monday to reach a low of $94,590, a level not seen in six months. Bitcoin derivatives have continued to show weakness even though several big tech names experienced similar drops during the past week. Now traders are asking if the market is already at a level and what else must occur before confidence can return.

This pullback erased $900,000,000 in BTC long leveraged positions. That’s less than 2% total open interest. Although the price drop was large, it barely affected the overall market. Comparatively, a cascading liquidations on Oct. 10The very low liquidity of BTC futures caused a drop in open interest by 22%.

After US President Donald Trump’s announcement that he would cut tariffs in order to reduce high food prices, concerns about inflation increased. Mohamed El-Erian, chief economic adviser at Allianz, told Yahoo Finance has increased the recession risk as the “lower ends of the income distribution for households” The struggle with your “affordability crunch.” El-Erian has warned that the contagion may spread to other sectors of the economy.

BTC’s futures premium was near 4% last Friday. It was the same as it had been in previous weeks. While the BTC futures premium is below the neutral line of 5%, it has moved from its 3% lows earlier in this month. The demand for leverage is still muted but this does not necessarily mean that bears are firmly convinced. If you want to know if professional traders are expecting more downside in the future, look at their long/short ratios.

Binance whales, market makers and investors have increased their positions since Wednesday. The reason is that they bought the dip when Bitcoin dropped below $100,000. OKX’s whales reduced their bullish position at a significant loss on Friday after $98,000 failed as support. Despite this, traders seem more confident now than on Tuesday.

Concerns about the AI sector drive traders to derisk in an uncertain economic environment

A recent correction in risk markets was partly driven by concerns about the artificial intelligence industry, which has been a positive factor for stocks. Michael Burry, a legendary investor questioned It is worth examining whether the lengthening of depreciation periods for computer equipment artificially boosts earnings. Amazon was the only large tech company to have recently cut its depreciation period.

Bitcoin: The net inflows and outflows for the two days totaling $1.15 Billion spot exchange-traded funds Even though it represents less than 1 percent of assets, the US ETFs weighed heavily on the market sentiment. In addition, the selling pressure of one single fund was a factor. 2011 Bitcoin holder A feeling of fear and unease was heightened. Analysts said that the incident was an isolated event and did not represent a larger trend.

BTC delta-skew options stood at 10% Friday, almost the same as it was last week. The market’s fear index is above neutral at 6%, but it still remains below its peak of 16% last month. One could say that options have shown resilience, given that Bitcoin is down 24% since its all-time peak.

Related: 3 reasons why Bitcoin and risk markets sold off: Is recovery on horizon?

CoreWeave (CRWV), Ubiquiti Group (NBIS), Symbiotic Group (SYM), and Super Micro Computer, all companies with a market cap of at least $20 billion have suffered losses in excess of 15%. It is likely that traders will derisk their investments and prefer cash to other assets until the economy becomes more clear. Bitcoin’s prices may therefore remain low.

This article was written for general information, and not to provide investment or legal advice. These are solely the opinions, views, and thoughts of the author and may not reflect the opinions and views of Cointelegraph.