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Bitcoin Rebounds 4% Despite 'Death Cross' Warning Below $50K

Bitcoin recovers 4.4% after a sharp dip, but triple ‘death crosses’ on charts spark warnings of a potential drop below $50,000.

• Main Points:

  • Price Rebound: Bitcoin bounces back to $58,000 after dipping to $56,150.

  • Triple ‘Death Cross’: Three ‘death crosses’ indicate potential for further downside.

  • Market Liquidations: $75 million in BTC liquidations as traders face volatility.

  • Negative Funding Rates: Bitcoin funding rates hit 10-month lows, signaling bearish sentiment.

  • Potential Sub-$50K Drop: Analysts warn of a possible drop to $45,000 if trends continue.

• Detailed Insights:

  • Price Rebound: Bitcoin recovered 4.4% on August 16, climbing back to $58,000 after dipping to $56,150. The rebound followed the release of U.S. unemployment data, which triggered market volatility and liquidations for both long and short positions.

  • Triple ‘Death Cross’: Bitcoin has encountered a series of ‘death crosses,’ including one on the four-hour chart, suggesting a possible bearish trend. These patterns have traders and analysts concerned about potential further declines.

  • Market Liquidations: According to CoinGlass, Bitcoin saw $75 million in liquidations over 24 hours, reflecting the market's heightened volatility as both bullish and bearish positions were wiped out.

  • Negative Funding Rates: CryptoQuant reported that Bitcoin's funding rates have been negative for three consecutive days, reaching their lowest levels since October 2023. This indicates that short positions are dominating the market, which could lead to further price declines.

  • Potential Sub-$50K Drop: Analysts are warning of a potential drop to $45,000 if Bitcoin fails to hold its current support levels. The presence of multiple ‘death crosses’ and negative funding rates suggests that the market may still have room to fall.

Related: US Gov’t Bitcoin Sale ‘Doesn’t Affect Anything’ as Bears Drive Market Down

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Goldman Sachs Reveals $418M Bitcoin ETF Holdings

Goldman Sachs reports $418 million in Bitcoin ETF investments, with a major stake in BlackRock's iShares Bitcoin Trust. Meanwhile, Morgan Stanley reduces its holdings, and hedge funds increase their crypto exposure.

• Main Points:

  • Goldman Sachs’ Investments: Goldman Sachs holds $418M in Bitcoin ETFs, led by a $238M stake in BlackRock’s IBIT.

  • Morgan Stanley’s Strategy: Morgan Stanley cuts its Bitcoin ETF holdings from $270M to $189M.

  • Hedge Fund Moves: Hedge funds like Millennium Management take aggressive positions in Bitcoin ETFs.

  • Institutional Interest: Growing institutional involvement signals Bitcoin’s increasing acceptance as a mainstream asset.

  • Market Volatility: Despite market fluctuations, institutional investors continue to back Bitcoin ETFs.

• Detailed Insights:

  • Goldman Sachs’ Investments: Goldman Sachs revealed in its latest 13F filings that it has invested $418 million in spot Bitcoin ETFs by Q2 2024, with the largest portion—$238 million—allocated to BlackRock’s iShares Bitcoin Trust (IBIT). The bank also holds stakes in Fidelity’s Wise Origin Bitcoin ETF and Invesco Galaxy Bitcoin ETF.

  • Morgan Stanley’s Strategy: In contrast, Morgan Stanley reduced its Bitcoin ETF holdings to $189 million, primarily through selling shares in Grayscale Bitcoin Trust (GBTC). Despite this, the bank continues to offer clients access to ETFs from BlackRock and Fidelity.

  • Hedge Fund Moves: Hedge funds are becoming more aggressive in the crypto market. Millennium Management, holding $62 billion in assets, is the largest shareholder in BlackRock’s Bitcoin fund, though it has halved its position since May. Other funds like Capula Investment Management and Point72 Asset Management are also increasing their exposure to Bitcoin ETFs.

  • Institutional Interest: The rising involvement of institutional investors like Goldman Sachs and major hedge funds highlights the growing acceptance of cryptocurrency as a legitimate asset class, despite ongoing market volatility.

  • Market Volatility: The increased investment in Bitcoin ETFs by institutions reflects confidence in the long-term potential of cryptocurrency, even as the market experiences fluctuations.

Related: Bitcoin, Ethereum Dip as Market Digests CPI Numbers

CoinGlass: Bitcoin Could Drop Further Amid 'Unusual' Open Interest

Bitcoin’s open interest reaches $29 billion despite price declines, signaling potential for further drops, according to CoinGlass.

• Main Points:

  • Rising Open Interest: Bitcoin’s open interest hits $29B as prices drop.

  • Unusual Trend: Open interest rising while prices fall is seen as unusual.

  • Leverage Risks: Increased leverage may amplify future price movements.

  • Negative Funding Rates: Discourages long positions, and incentivizes shorts.

  • Options Expiry: 24,000 BTC contracts expiring, but limited spot impact expected.

• Detailed Insights:

  • Rising Open Interest: On August 16, CoinGlass reported that Bitcoin’s open interest (OI) in futures contracts reached $29 billion, even as Bitcoin’s price declined by 5% over the previous two days. This suggests that the market may have “more room to fall.”

  • Unusual Trend: CoinGlass noted that it’s “a bit unusual” for open interest to rise as Bitcoin prices fall, indicating increased activity in both long and short positions.

  • Leverage Risks: The rising OI reflects more leverage in the market, which could lead to significant price movements. For example, on August 5, a leverage flush caused Bitcoin to drop 20% in less than a day.

  • Negative Funding Rates: CoinGlass also pointed out that funding rates are currently negative, which could discourage traders from holding long positions and incentivize short positions, adding downward pressure on prices.

  • Options Expiry: Around 24,000 BTC contracts, worth $1.4 billion, are set to expire on August 16. While these options expiries typically have a limited impact on spot prices, the large leverage in the market could have a greater influence if positions are forced to close.

Related: Bitcoin Price Struggles Around $59,000 as US Government Transfer Weighs

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This article is not financial advice. Market conditions can change rapidly, and past performance does not guarantee future results