Bitcoin’s (BTC) nearly 10% drop last week was a “healthy correction” that reduces the risk of sharp price swings in the coming days, according to the latest “Bitfinex Alpha” report.
A pullback triggered by escalating tensions in the Middle East briefly pushed BTC below $60,000 before the market stabilized. This caused the open interest (OI) of perpetual contracts to shrink from an overheated $35 billion to a more stable $31.8 billion range.
Notably, the decline in OI was associated with increased selling in the spot market, triggering a cascade of long liquidations. Prices initially fell below the critical support level of $65,200 and subsequently fell sharply as traders exited their positions.
The report said that the pullback and the decline in open interest indicate that the market is trying to find a balance. Although these movements are passive, the current market forces appear to be stabilizing as traders adjust their positions.
Uncertain outlook
Spurred by positive news on the U.S. labor market, Bitcoin rebounded to the $62,500 price area on October 4. The rebound also supported the rise of some altcoins such as Dogwifhat ( WIF ) and Solana ( SOL ).
Despite the strong upward momentum, the spot cumulative volume increment (CVD) indicator remains sluggish, indicating a lack of active buying activity in the spot market. Therefore, the outlook for Bitcoin and the broader cryptocurrency market remains uncertain and depends on multiple factors.
The report states that upcoming Consumer Price Index (CPI) inflation data and ongoing geopolitical tensions will play a key role in influencing the direction of Bitcoin.
Additionally, spot traders’ positioning at the start of the week will be critical in determining the next move, as early-week trading can often provide insight into broader market sentiment.
