The CryptoQuant weekly report suggests that the drop in Bitcoin‘s price to $61,000 during the weekend was caused by investors selling off their Bitcoins in preparation for the upcoming halving event on April 20th.
Traders have cashed in on their profitable long positions, leading to a surge in sell orders overpowering buy orders in the perpetual futures markets. This shift is reflected in the Buy-Sell Ratio, which currently hovers below one. The ratio typically exceeds one when buy orders outnumber sell orders.
Traders Decrease Exposure to Bitcoin
Traders reduced their Bitcoin positions, causing open interest to drop from around 250,000 BTC to roughly 220,000 BTC. Short-term investors, who own Bitcoin for less than half a year, sold their holdings to cash in on substantial gains following Bitcoin’s surge to $71,000.
Since January 2024, funding rates had been positive. However, they recently turned negative, as reported by CryptoQuant. This shift indicates that traders are now prepared to pay a premium to open and keep their short positions active.
Another way to phrase this is: The growth in demand for Bitcoin among larger holders (those with 1,000 to 10,000 coins) has decelerated compared to the rapid increase seen just last month. Specifically, the total Bitcoin held by these entities has risen by only 8% in the latest period, down from the 11% gain reported in mid-March.
In a similar fashion, the number of new Bitcoins being demanded by permanent holders and exchange-traded funds in the US has decreased. The number of Bitcoins held by permanent holders (accumulation addresses) reached a monthly record of 161,000 BTC, but this is fewer than the previous months’ 204,000 BTC. ETFs have seen net withdrawals for three consecutive trading days, with Grayscale’s GBTC experiencing more outflows than total inflows over time.
Bitcoin Still in Bull Market
Despite a decrease in demand and open interest, Bitcoin is still in the bull market stage. According to CryptoQuant analysts, the latest sell-off was essential for wiping out traders’ unrealized profits, signaling the end of a bottom in bull markets. The value of Bitcoin is now approaching the price that traders paid on average, or realized price, which is around $58,000 and has previously acted as support during this period.
“Bitcoin is currently experiencing a bull market according to long-term trends and CryptoQuant’s Bull-Bear Market Indicator. This indicator remains in the ‘bull’ position. However, a warning was issued that the market became overheated when Bitcoin prices surpassed $70K.”
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2024-04-19 20:22