BTC Slips to $28.300 after Leveraged Fund

Bitcoin’s recent resurgence in downside volatility fits a pattern that has seen the cryptocurrency reach interim highs following significant rallies in meme coins like SHIB in the past. The meme coin, which is often hailed as a potential Dogecoin competitor, saw a rise of more than 20% in the first 12 days of the month.

Bitcoin (BTC) awoke from a long slumber early Thursday, August 17th, but the ensuing action wasn’t exactly what bullish investors had hoped for.

The decline followed a 1.6% drop on Wednesday, August 16th, a move that reflected the prevailing risk-averse sentiment on Wall Street. The U.S. stock market was on a downward trend Tuesday, August 15th, driven by renewed concerns about the banking sector and fears about a possible recession in China.

Bitcoin, the leading cryptocurrency, saw a drop to $28,346, marking its lowest level since June 21st

BTC’s recent downside volatility immediately follows the release of the Commitment of Traders (COT) report by the U.S. Commodity and Futures Trading Commission (CFTC). The report revealed that leveraged funds, which include hedge funds and commodity trading advisors, had expanded their bearish positions in CME-listed cash-settled bitcoin futures in the week ending Aug. 8.

Lawrence Lewitinn, director of content at crypto analytics firm The Tie, highlighted in a weekly newsletter that “two-thirds of their positions are short (shown in red) and one-third are long (shown in blue). This is the largest size ever” since April 2022.”

This increase in bearish bets among leveraged funds may reflect concerns among experienced traders about the potential impact of the gloomy macroeconomic outlook and the rise in both nominal and inflation-adjusted U.S. Treasury yields.

Moreover, the cryptocurrency market showed an indifferent attitude towards recent positive developments specific to the crypto space. This includes PayPal, one of the world’s largest financial services companies, launching its own stablecoin. Furthermore, the crypto market remains relatively unmoved despite a plethora of applications for futures-based exchange-traded funds (ETFs) linked to Ether (ETH).

David Lawant, head of research at FalconX, an institutional trading firm, pointed out, “Both volatility and volume metrics continue to fall to multi-year lows … Overall, improving trends and fundamentals in the crypto space continue to sustain optimism A good time to keep a close eye on potential spillover effects from the macroeconomy to broader risk assets and, by extension, cryptocurrencies.”

Bitcoin’s recent resurgence in downside volatility fits a pattern that has seen the cryptocurrency reach interim highs following significant rallies in meme coins like SHIB in the past

The meme coin, which is often hailed as a potential Dogecoin competitor, saw a rise of more than 20% in the first 12 days of the month. This optimism stemmed from the expectation that the introduction of a Layer 2 shibarium would allow SHIB to change its image and become a more serious player in the industry.

However, SHIB is down 18% since August 12th, including a significant 9% drop in the last 24 hours alone, partly due to the turbulent launch of the shibarium project. As reported by data source Coinglass, funding rates for SHIB perpetual futures trading on Binance have fallen to a two-month low of -0.084%.