Bitcoin Hits 8-Month High and Takes a Breather! Virtual Asset Market Retreats to $2.87 Trillion

▲ Bitcoin, Cryptocurrency ©

The virtual asset market retreated to $2.87 trillion as Bitcoin (BTC) took a breather after hitting an 8-month high. Analysis suggests that short-term volatility is increasing due to a combination of profit-taking amid caution ahead of the release of the US Personal Consumption Expenditures (PCE) price index on the 30th, and a rapid increase in leverage.

According to CoinMarketCap, a cryptocurrency market tracking site, on September 28 (local time), the total market capitalization of virtual assets recorded $2.87 trillion, a 0.9% decrease over 24 hours. After Bitcoin recently surpassed $87,000 to reach an 8-month high, profit-taking emerged. Additionally, macroeconomic uncertainty increased ahead of the PCE price index release on September 30, dampening investor sentiment for risk assets. The correlation between the virtual asset market and the S&P 500 over the past week was 85%.

The expansion of leverage in the derivatives market was also cited as a factor that could increase the extent of the correction. The total Open Interest surged by 17.32% over 24 hours, reaching $409.36 billion. The Fear & Greed Index also remained in the 'Greed' zone at 70, indicating short-term overheating concerns. Bitcoin liquidations were tallied at $14.5 million, mostly occurring in short positions.

The market's attention is focused on the PCE price index to be released on the 30th. If inflation slows more than expected, interest rate burdens could ease, supporting virtual asset prices. Conversely, if high inflation is confirmed, a sell-off is likely to continue. The fact that US Treasury yields remain high and vigilance over the Federal Reserve's (Fed) hawkish monetary policy persists is also contributing to the market's wait-and-see attitude.

Technically, the $80,000-$81,000 range for Bitcoin has been identified as a key support level. If this price range holds, the recent upward structure could be maintained, allowing for a resumption of the rebound. However, if $80,000 breaks, there is a possibility of further correction down to $77,000.

CoinMarketCap analyzed the current decline as a short-term correction phase driven by profit-taking after the recent surge, coupled with macroeconomic uncertainty. With increased leverage potentially amplifying price volatility, the future direction of the market is expected to depend on the PCE price index on September 30 and whether Bitcoin can hold the $80,000 support level.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*