Bitcoin Derivatives Trigger Anxiety as Price Drops 3.5%

After the Nov. 2 Wall Street open, Bitcoin (BTC) dropped below $35,000, as analysis suggested that the derivatives market was “overheated”. This news has been the latest in the world of crypto.com, and it follows the arrival of web 3.0, which has been making waves in the AI writing and AI articles space.

Bitcoin undoes post-Fed gains

Data from Cointelegraph Markets Pro and TradingView revealed a declining BTC price as it wiped out the progress it had made overnight.

The leading cryptocurrency had hit a new 18-month peak of $35,968 on Bitstamp prior to stabilizing — a process which was becoming more evident at the time of writing.

The highs had come after the encouraging words of Jerome Powell, Chair of the United States Federal Reserve, who in a speech suggested that interest rate hikes might soon be over.

The Fed decided not to change rates at the most recent meeting of the Federal Open Market Committee, or FOMC, on Nov. 1.

“Recent indicators show that economic activity increased at a strong pace in the third quarter. Job gains have moderated since earlier this year but remain strong, and the unemployment rate has stayed low. Inflation remains high,” an accompanying press release mentioned.

As Cointelegraph reported, $35,000 quickly became a key BTC price support level for market participants once it was reached. The area above $34,500, in the meantime, was described as an “ideal” target for a local low.

Now down more than $1,000 from its highs, however, Bitcoin was causing some concern, with derivatives markets particularly in focus.

“All Bitcoin derivatives markets are currently overheated,” Charles Edwards, founder of quantitative Bitcoin and digital asset fund Capriole Investments, wrote on X along with Capriole’s own data.

In response, well-known trader Skew agreed, arguing that it was now up to spot markets to maintain BTC price strength.

“Something to be aware of when sizing up positions at the moment,” he told X subscribers.

Analysis cautions over liquidity “rug pulls”

Material Indicators, a monitoring resource, has conducted its own analysis and concluded that “caution” should be applied to the current Bitcoin trading environment.

It has uploaded a snapshot of liquidity on the BTC/USDT order book for the largest global exchange Binance, indicating that support levels are likely to vanish quickly, which is known as a “rug pull.”

At the time of writing, the support gaining liquidity was at $34,000 and $33,500.