After showing an impressive upside momentum, Bitcoin has run out of steam and is down to $19,720. The bulls recorded new, higher local highs and higher lows but now Bitcoin has lost nearly 6% of its value in the last 24 hours. Ethereum, down by 6.64%, is trading at $1,476.
Data suggests that Bitcoin is by no means gaining strength as the rate remains tightly below the 200-week average. The drop in BTC price is attributed to uncertainty surrounding the upcoming U.S midterm elections which will determine which party controls Congress. Reports indicate that the Democrats have a majority in the lower house, but if the Republicans gain the upper hand, it could hurdle President Biden’s future spending plans.
Moreover, trading volume on leading cryptocurrency exchanges, as per ForkLog, fell 25% in October to its lowest level since December 2020. Analysts believe traders should analyze the margin trading markets to understand how professional traders are positioned. Margin trading is actually a risky crypto strategy that allows traders to magnify gains and losses with borrowed funds; it’s also referred to as leverage. Crypto exchanges like Binance and FTX, among others, offer margin trading options.
Investors or traders can increase exposure by borrowing stablecoins to buy an additional Bitcoin position. But Bitcoin borrowers can only short the cryptocurrency because they place bets on its price declines. The balance between margin longs and shorts isn’t always matched, unlike futures contracts.