Bitcoin’s market recently experienced a significant decline, reaching a low of $100,000 from a previous high of $105,900. This sharp decrease was attributed largely to the escalating feud between President Trump and Elon Musk, which has influenced market sentiment. As a result, the Futures market saw $324 million in liquidations of long positions, with traders who were betting on price increases facing losses. Notably, some investors, including James Wynn, were liquidated multiple times during this turbulent period.
In terms of market metrics, Bitcoin’s Open Interest fell from $34.8 billion to $34.2 billion, indicating a $600 million exit of capital from the Futures market. This steep drop indicates that investors are becoming increasingly cautious amid rising political tensions. The Funding Rate also turned negative for the first time in 30 days, signaling that short positions are gaining traction and a bearish sentiment is prevailing among traders. Moreover, the market reacted with significant sell-offs, resulting in over 32,000 BTC being deposited across various exchanges, while Binance alone accounted for 2,500 BTC.
Many holders opted for panic selling, fearing further declines. Despite these developments, there are signs that Bitcoin may soon recover. Although the Musk-Trump dispute initially created a negative sentiment, the impact appears to be temporary. After the drop to $100,000, there has been a surge in buyers seizing the opportunity to purchase at lower prices, leading to negative netflows on exchanges.
In the short term, while many short-term holders have been affected by the recent dip, the demand for Bitcoin could propel it back toward the $105,900 resistance level if sustained. The immediate support for short-term holders is now observed at $97,500, making it a critical area to watch.