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Bitcoin price holds $26K as derivatives data hints at end of volatility spike

Press Releases Crypto News Cointelegraph Bitcoin price holds $26K as derivatives data hints at end of volatility spike

In the past few months, Bitcoin traders had grown used to less volatility, but historically, it’s not uncommon for the cryptocurrency to see price swings of 10% in just two or three days. The recent 11.4% correction from $29,340 to $25,980 between Aug. 15 and Aug. 18 took many by surprise and led to the largest liquidation since the FTX collapse in November 2022. But the question remains: Was this correction significant in terms of the market structure?

Certain experts point to reduced liquidity as the reason for the recent spikes in volatility, but is this truly the case?

BTC surged 70%+ in 2023, yet the “Alameda gap” – liquidity dip post FTX and Alameda Research collapse – remains, supported by low volatility.

Read full analysis here: https://t.co/kVslgLQtpL pic.twitter.com/g8Ac7udBl7

— Kaiko (@KaikoData) August 17, 2023

As indicated by the Kaiko Data chart, the decline of 2% in the Bitcoin (BTC) order book depth has mirrored the decrease in volatility. It’s possible that market makers adjusted their algorithms to align with the prevailing market conditions.

Hence, delving into the derivatives market to assess the impact of the drop to $26,000 seems reasonable. This examination aims to determine whether whales and market makers have become bearish or if they’re demanding higher premiums for protective hedge positions.

To begin, traders should identify similar instances in the recent past, and two events stand out:

*Bitcoin/USD price index, 2023. Source: TradingView*

The first decline took place from March 8 to March 10, causing Bitcoin to plummet by 11.4% to $19,600, marking its lowest point in over seven weeks at that time. This correction followed the liquidation of Si

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Author: Marcel Pechman

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