Bitcoin Navigates Uncertain Waters: Will it Break the $72,000 Barrier?

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In the pulsating world of cryptocurrency, Bitcoin continues to hold its ground firm, albeit with a hint of uncertainty amongst traders after an unexpected dump this past June 11. Despite this upset, Bitcoin manages to display a semblance of stability as it trends above $67,000, although this falls short of its alluring progress on June 12.

But even this seemingly robust figure is unable to dispel certain concerns in the crypto marketplace. The reason? The coin, regardless of the widespread confidence it has managed to inspire, hovers considerably below the $72,000 mark, casting a shadow of apprehension. This mark is shaping up to be a crucial liquidation territory. Should it capitulate, Bitcoin could potentially unlock a surge of short liquidation, fast-tracking its ascension to $74,000 and beyond.

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A pertinent question rises to the surface – will Bitcoin see a soaring demand in the cutthroat spot markets?

A renowned on-chain analyst incites particular intrigue by postulating that Bitcoin is experiencing stagnation at spot levels beneath the $72,000 mark, since hedge funds are short on futures. This scarcity might seem surprising to many, but it is far from a new phenomenon in the crypto arena. In fact, it is an open secret that hedge funds have bolstered their Bitcoin shorts via the Chicago Mercantile Exchange (CME) by more than a staggering $1 billion in merely the past week.

The implications of such a maneuver are twofold. One, there’s an urgent need for a couple of pivotal events to occur to overturn this chain of events and prop up the prices. Despite Bitcoin shorting on the CME not necessarily ringing alarm bells on a bearish note, hedge funds seem to be resorting to a savvy arbitrate scheme, and coin holders are better off focusing on the fundamentals. Two, hedge funds are playing both ends against the middle by shorting Bitcoin futures on the CME and purchasing on the spot market simultaneously. With this in mind, the analyst surmises that in order for Bitcoin to shatter the $72,000 glass ceiling and charge past $74,000, users would have to buy at least double the sum of Bitcoin futures shorted in the spot market.

However, there’s another side to this shimmering coin. If there’s no motivation to drive the spot prices up, Bitcoin prices would have to take a plunge downwards. This downward spiral would motivate short sellers, in this case, the hedge funds, to unwind their positions lest they bear the burden of continued payment of funding rates. In a bear market scenario and falling futures prices, short sellers find themselves obligated to reimburse longs to prevent the index from swerving off course.

The probability of a sudden surge of demand in the spot market is far from clear. But what does stand out is the noticeable institutional interest in Bitcoin, albeit with the catch that hedge funds, capitalising on their arbitrage trade via the CME, strive, above all, for profiteering, irrespective of the trajectory of the price movements.

Forwarding this bullish perspective, the analyst substantiated his claims with another engrossing chart, leveraging the “Growth Rate” metric to juxtapose variations in Bitcoin’s market and realisation cap. Currently, this metric languishes around 0.001, notably beneath 0.002, indicating a market that’s possibly overheated. Yet, this could signal the heralding of bulls gearing up for a compelling comeback. As with all things cryptocurrency, we must simply wait and watch.

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Melinda Cochrane is a poet, teacher and fiction author. She is also the editor and publisher of The Inspired Heart, a collection of international writers. Melinda also runs a publishing company, Melinda Cochrane International books for aspiring writers, based out Montreal, Quebec. Her publication credits include: The art of poetic inquiry, (Backalong Books), a novella, Desperate Freedom, (Brian Wrixon Books Canada), and 2 collections of poetry; The Man Who Stole Father’s Boat, (Backalong Books), and She’s an Island Poet, Desperate Freedom was on the bestseller's list for one week, and The Man Who Stole Father’s Boat is one of hope and encouragement for all those living in the social welfare system. She’s been published in online magazines such as, (regular writer for) ‘Life as a Human’, and Shannon Grissom’s magazine.