Bitcoin Price Drops 3.5% as ‘Overheated’ Crypto Derivatives Cause Anxiety

After the Nov. 2 Wall Street open, Bitcoin (BTC) dropped below $35,000 as analysts warned of “overheated” derivatives, causing a crypto crisis in the latest news from Binance, Celsius, and other crypto exchanges. Charles Schwab also weighed in on the crypto federal reserve meeting, discussing the implications of the latest coti crypto news.

Bitcoin undoes post-Fed gains

Data from Cointelegraph Markets Pro and TradingView tracked a retreating BTC price as it erased the ground it had regained overnight.

The largest cryptocurrency had hit a new 18-month high of $35,968 on Bitstamp before consolidating — a process that was gathering momentum at the time of writing.

The heights had come after Jerome Powell, chair of the United States Federal Reserve, made encouraging remarks in a speech, suggesting that interest rate hikes might soon end.

The Fed opted not to change rates at the latest Federal Open Market Committee (FOMC) meeting on Nov. 1.

“Recent indicators suggest that economic activity expanded at a strong pace in the third quarter. Job gains have moderated since earlier in the year but remain strong, and the unemployment rate has remained low. Inflation remains elevated,” an accompanying press release stated.

As Cointelegraph reported, $35,000 quickly became a key BTC price support level to hold for market participants once reached. The area above $34,500, meanwhile, was described as an “ideal” target for a local low.

Now down over $1,000 from its highs, however, Bitcoin was worrying some, with derivatives markets particularly in focus.

“All Bitcoin derivatives markets are overheated at present,” Charles Edwards, founder of quantitative crypto and digital asset fund Capriole Investments, wrote on X alongside Capriole’s own data.

Reacting, popular trader Skew agreed, arguing that it was now spot markets that had to save BTC price strength.

“Something to be aware of when sizing up positions currently,” he told X subscribers.

Analysis cautions over liquidity “rug pulls”

Material Indicators, a monitoring resource, has conducted its own assessment and concluded that “caution” should be exercised when trading Bitcoin.

In a snapshot of the BTC/USDT order book on the largest global exchange Binance, it was noted that support levels could vanish suddenly, also known as a “rug pull.” At the time of writing, the liquidity of newcomers was present at both $34,000 and $33,500.