Was Last Week’s Bitcoin Price Drop Just a Healthy Correction?

Last week, Bitcoin (BTC) saw a sharp decline of nearly 10%, primarily driven by rising geopolitical tensions in the Middle East.

While this downturn raised alarms among investors, Bitfinex analysts characterized it as a necessary correction that would help temper market volatility.

The analysts explained that the current geopolitical climate has dampened risk appetite, leading to aggressive spot sales and a drop in prices. They noted that the tension between Iran and Israel has particularly impacted investor sentiment, causing a swift rise in selling activity.

Alongside the price drop, open interest (OI) also decreased from $35 billion to about $31.8 billion, signaling a move toward market stability. Bitfinex experts indicated that this reduction in OI reflects improved conditions, reducing the likelihood of drastic price swings.

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Despite this stabilization, analysts warned that it’s premature to predict Bitcoin’s immediate future, as the market remains sensitive to external news and economic indicators. Investors are advised to keep a close watch on upcoming US economic data, such as CPI and PPI releases, as well as geopolitical developments.

Alexander Stefanov