- Grayscale experts suggest that the recent drop in cryptocurrency prices was influenced by negative trends in the stock market.
- Analysts from K33 suggest that while news events may have triggered the drop, a significant long liquidation was inevitable.
- According to experts, the price may rebound following the recent liquidations.
The recent sharp decline in Bitcoin prices has sparked numerous theories. One such theory involves Grayscale, a major player in the cryptocurrency market. However, the company denies any direct involvement in the price drop and has shared its own theories. So, what do experts think about the recent price fluctuations?
Grayscale and Cryptocurrencies
Grayscale Investments is currently involved in an ongoing lawsuit against the Securities and Exchange Commission, with no decision yet made. Many experts were anticipating a decision on Friday regarding the company’s plans for a spot bitcoin ETF. The recent crash has been linked to these expectations.
Amidst all this excitement, over $1 billion in leveraged positions were liquidated in the last 24 hours, pushing Bitcoin below $26,000 for the first time in two months. According to CoinGecko, Bitcoin’s price fluctuated throughout Friday, largely remaining around the $26,000 mark.
In a report released on Friday, Grayscale suggested that the declines appeared to be related to “macro factors” and denied any connection with their ongoing lawsuit against the SEC.
Bitcoin Predictions from Experts
Analysts spent the day trying to determine the cause of these events. Some news headlines pointed to a report by the Wall Street Journal that SpaceX had sold its bitcoin assets after losing $373 million in value. Others blamed the Federal Reserve following hawkish hints in Wednesday’s FOMC minutes.
The timing of the night’s decline coincided with news that China Evergrande had filed for bankruptcy protection in the US. However, according to K33 Research, none of these narratives can explain the timing or severity of the decline.
K33 pointed to on-chain data showing that 50,000 BTC ($1.3 billion) worth of open interest in the derivatives market was wiped out within a few hours.
Potential for a Short Squeeze
If anything, the liquidation of long positions and increased shorting could lay the groundwork for an upcoming short squeeze, according to K33.
Lucas Kiely, Chief Investment Officer at Yield App, supported K33’s analysis, stating that Bitcoin and Ether have already started to recover, suggesting that the sharp declines were liquidation events.
Conclusion
Looking on the bright side, BTC volatility is on the rise again, indicating that the boring sideways period may be over for now. A potential short squeeze is what bulls are hoping for these days.
