Bitcoin (BTC) pulled back nearly 10% last week, affected by geopolitical tensions in the Middle East.
While this decline made investors nervous, Bitfinex analysts stated that this correction was a healthy correction that reduced volatility.
Analysts said that geopolitical tensions in the Middle East have reduced risk appetite among investors, and that the reasons for the decline are reduced risk appetite and, as a result, increased spot sales.
“Bitcoin has pulled back 10% on a weekly basis, driven primarily by aggressive spot selling and liquidation of leveraged positions.
Another important reason for this decline in Bitcoin prices was the increasing geopolitical tension between Iran and Israel at the beginning of the month. As this tension dampened investors' risk appetite, market optimism quickly diminished and sales increased.
Bitcoin and the Market Trying to Find Balance!
As Bitcoin has been experiencing a decline due to geopolitical tensions and aggressive selling, open interest (OI) has also fallen from the overheated level of $35 billion to the more stable $31.8 billion region.
At this point, Bitfinex analysts said that the recent correction was healthy and the market was trying to find balance after the correction.
“This decrease in OI suggests that market conditions have become relatively stable and the risk of sudden price movements is now lower.”
Analysts have recently noted that it is too early to draw a definitive conclusion on what the short-term direction is for Bitcoin and the broader cryptocurrency market.
At this point, Bitfinex analysts pointed out that BTC and the market are still sensitive to incoming news flow and economic data, and said that the critical US CPI and PPI data to be announced this week and geopolitical developments should be followed carefully by investors.
*This is not investment advice.
