Spot market purchases support Bitcoin above $80,000

Ali Askar, chief developer at OTS Capital, stated that Bitcoin’s resilience above the $80,000 level, despite the US Federal Reserve’s decision to raise interest rates, reflects strong demand in the spot market. He noted that this performance defied the expectations of some investor segments amid a tighter monetary environment.

In an interview with Arabiya Business, Askar explained that the rate hike was expected to trigger a risk-off sentiment, given that Bitcoin is classified as a high-risk asset. This indeed led to selling pressure in futures and derivatives markets.

He added that while the market witnessed notable selling in futures contracts, these pressures were offset by strong buying in the spot market, which helped absorb the sell-off wave and keep prices near the $80,000 level.

Askar pointed out that liquidations and highly leveraged positions in the derivatives market contributed to what he described as a “snowball effect,” where certain price breaks accelerated market movements.

He clarified that these developments helped push prices to higher levels before Bitcoin managed to stabilize its trading above the $80,000 mark in recent days.

He further noted that the market also experienced some outflows from Bitcoin-linked exchange-traded funds (ETFs) before recent closures, adding further pressure on prices.

Regarding institutional investor trends, Askar said current signals remain mixed. The market saw significant purchases of actual Bitcoin in the spot market, coinciding with some outflows from ETFs.

This divergence makes it difficult to determine the direction of institutional investors at the current stage. He emphasized that assessing the true trajectory of investment flows requires more time and data.

Commenting on the future of cryptocurrency regulations following the setback of the Clarity Act, Askar explained that the biggest challenge for regulators lies in the rapid pace of sector development.

He said that each digital currency or project operates on a different business model and ideas, making it extremely difficult to establish a comprehensive regulatory framework.

He added that many countries have attempted to build regulatory frameworks for the cryptocurrency market, but the emergence of new technologies or applications shortly after would push those laws to face unexpected challenges.