Bitcoin dropped to its lowest value in the last fourteen days. It opened Thursday at $114,263 and saw a slight uptick that sent prices a bit higher.
However, the hike was short-lived as the apex coin retraced afterwards. It dropped to a low of $111,972 a few hours ago.
The plummet wiped out many long positions. Data from CoinGlass shows that traders lost over $228 million in Crypto Futures. The second-largest liquidation happened on Bitcoin as investors lost over $47 million.
Why Did Bitcoin Dip?
Bitcoin saw a massive retracement last week due to the release of the negative US PPI. It has since struggled as traders are yet to shrug off its effect. Nonetheless, the latest decline follows several revelations about the US economy.
Jobless claims dropped on Thursday. Data revealed that the number of Americans who filed for jobless benefits rose to the highest in three months. Additionally, the number of people who received unemployment relief last week rose to the highest in almost four years. These reports indicate that the labor market is losing its strength. The claims also presented a heightened fear of inflation.
It is also worth noting that the spike in these metrics reduces the probability of the Federal Reserve reducing interest rates. Investors responded to the news by dumping some of their assets, causing the price to dip. Nonetheless, the drop in Bitcoin’s price is not as significant as many may expect. This was due to a surge in S&P Manufacturing PMI.
The index of business activity in the manufacturing sector (PMI) came in at 55.3, higher than the previous figure of 49.8. Additionally, the composite business activity index (PMI) from S&P Global rose to 55.4 from 55.1. These indicators suggest improving business conditions amid the jobless claims.
Is the Uptrend Back?
Bitcoin opened Friday at $112,297 and peaked at $113,472 a few hours ago. However, it is currently trading slightly below its high. The current-day trading action mimics Thursday’s action, and the fear of a massive retracement remains high.
Nonetheless, it is worth noting that the apex coin is trading close to a critical level. The $112k support held out following several attempts but briefly flipped during the previous intraday. It is also a tough barrier, as there is considerable demand concentration around it.
Prior to the latest retest, the last time BTC tested this level was on Aug 3. Adding to the strength of this mark is the fact that it is the cost basis for short-term holders. Many of these holders will be in a loss once the asset drops further.
In recent times, the buyers defended $112k. However, recent data from Glassnode suggests a higher chance of a massive decline. Active addresses dropped by 10% last week, which means there are fewer participants from investors. Additionally, realized cap change showed to 4.2%, indicating lower liquidity inflows.
Both highlighted metrics indicate worsening trading conditions during the previous week. Nonetheless, amid the bearish sentiment, 96% of the total supply remains in profit.
Current trading action at the time of writing reveals that the situation has worsened. Bitcoin is seeing more selling pressure than the previous week and has registered more losses. This means that BTC may drop to the 78% fib level at $109k.
However, previous price movements suggest a slim chance of a rebound. The apex coin will look to reclaim $114k.
