Market News

Bitcoin's Decline: VanEck Analyst Highlights Market Dynamics Behind the Drop

In a recent analysis, Matthew Sigel, Head of Digital Assets Research at VanEck, provided insights into the causes behind Bitcoin's decline below $66,000.

He emphasized that the recent pullback is largely due to the unwinding of excessive leverage, with Bitcoin experiencing a 19% drop over the past week.

The open interest in Bitcoin futures has decreased significantly, shrinking from $61 billion to $49 billion, which reflects a broader reduction of over 45% since early October.

Sigel remarked that approximately $3-4 billion in liquidations occurred last week, with Bitcoin futures accounting for $2-2.5 billion of that total, indicating notable selling pressure but not panic liquidation.

Furthermore, the weakening sentiment around artificial intelligence has contributed to diminishing risk appetite, affecting investments in Bitcoin and its miners.

He noted that many Bitcoin miners are now selling on the spot market to bolster their balance sheets amid tightening funding conditions.

Sigel also pointed to renewed discussions on transparency within the crypto space, with suggested regulations like the Clarity Act gaining attention.

Despite Bitcoin nearing a 50% drop from its peak, he highlighted the relatively controlled market unwind this time compared to previous bear markets.

The analyst argued that while stress signals are emerging in derivative markets, the current downturn could present long-term investment opportunities.

In fact, Sigel himself has increased his Bitcoin positions, finding the current price drop increasingly attractive for future gains.