Reasons for bitcoin’s drop by more than 9% in a week revealed

The flagship cryptocurrency’s decline continues — over the past 7 days, bitcoin’s value has fallen by 9.3%. Crypto market experts attributed the drop in BTC $98,382.31 Bitcoin -0.09% Market capitalization $1.95 trillion VOL. 24 hours $3.77 billion to previous overly positive market sentiment and the US Federal Reserve’s announcement of a planned interest rate hike.

Commenting on the possible reasons for the market downturn, crypto analysts suggested that the main driving force could be the increase in dollar yields amid falling gold prices. This state of affairs was caused by the actions of the US Federal Reserve.

Experts from the analytical company Santiment emphasized another reason for the decline in the value of bitcoin: the overheating of the OTC derivatives market caused by overly positive investor sentiment.

Sanitment’s version was also confirmed by analysts of the Korean company CryptoQuant, based on the ratio of two futures market indicators: open interest rates and funding rates. According to CryptoQuant, the number of open long positions exceeds the number of short positions, which means that there is a significant open interest and a high probability of liquidation.

Another relevant indicator is the «funding rate». This is the name given to the payments that traders in the futures market exchange with each other. When the indicator has a positive value, it means that long positions are currently being paid for by short positions, and bullish sentiment prevails in the market. Negative values indicate that the majority share a bearish outlook.