Bitcoin price on the decline despite increasing applications for the Bitcoin spot ETF: A look at the current market situation

Bitcoin price on the decline despite increasing applications for the Bitcoin spot ETF: A look at the current market situation

Bitcoin price has fallen over the last week despite more companies applying for the Bitcoin spot ETF. The market sentiment remains positive but the price is going down.

Let's take a closer look at this week's Bitcoin price.

Previous Bitcoin price analysis
Last week, Deribit's Bitcoin options aggregate open interest for June 30 showed that Bitcoin would have an easy path to $41,000. Therefore, we predicted that Bitcoin could have an exciting week in early July. However, Bitcoin has been in a consolidation trend throughout the week.

Consolidation trends are typically artificially created by market makers (MMs) to extract liquidity from retail traders before the actual move up or down takes place.

A look at Coinglass shows that $616.89 million worth of shorts were liquidated on eight of the largest crypto exchanges in the last two weeks. If you compare the Buy Side Liquidity (BSL) hunt with the Sell Side Liquidity (SSL) hunt, you can see that the MMs only hunted a small portion of the SSL.

This is a hint of what could be coming. There are two possible scenarios:

Theory 1: Bearish
If the MMs take out the BSL, it means they may be planning to push down the Bitcoin price and don't want to let the short sellers profit from the impending crash.

This theory is further supported by the significantly low number of short sales in the chart. As the MMs push the price lower, they will remove the sell stops for the long-oriented traders.

Theory 2: Bullish
It could be a false move to trick the traders. Traders analyze charts in the same way. Most traders probably think that BSL is psychological resistance. Most of them have analyzed the price action and can see the aggressive liquidity hunt that is taking place. In their heads they think that theory 1 is in play.

But in reality, the MMs want to drive the price up. By tricking traders into thinking they want to push the price down (by clearing and triggering the BSL), they cause many traders to enter long positions.

There will then be an aggressive downward move over the next few days, wiping out all SSL and unwinding traders' long positions. The move also triggers all buy limit orders from long-oriented traders. Shortly after, the MMs aggressively change the trend and push the price higher.

Only the final group of traders who have placed their buy limit orders on the SSL and waited patiently will make a profit.

It is important to note that the information in this article is based on current events, technical charts, company news, and the author's opinion. There may be errors and you should not make your investment decisions based solely on this article.