BTC Demand Drops after Presser by Fed, Volatility Increases

The key takeaways

• Bitcoin’s Coinbase Premium went negative following a streak of 62 days.

• BTC remains above $115,000, despite increasing sell pressures and a CVD negative for futures.

Bitcoins (BTCCoinbase Premium Index turned For the first time in 62 days, Bitcoin has turned negative. The BTC/USD/BTC/USDT price differential between Binance BTC/USDT and Coinbase is often used as an indicator of US spot market demand.

The market’s shift follows a 94-day streak of sustained premium gaps, which marks Bitcoin’s highest institutional demand on record. The flip might indicate a waning interest from US investors, but broader signals show a nuanced market setup.

Onchain Analyst Boris VestBitcoin’s ratio of takers to sellers has fallen from 1 to 0, indicating a rise in selling by market-makers. Bitcoin continues to trade above $115,000 despite the aggressive selling. This indicates that passive large buyers are taking over to relieve the pressure. 

The futures funding rates remain neutral, at 0.01, indicating neither bullish or bearish dominance. This implies that leverage has been balanced, and an even larger movement is still in the offing. 

Vest highlighted the fact that futures’ CVD (cumulative volume delta) is continuing to show persistent selling pressure, without any significant breakdowns of price. Volume and price divergence suggests strength at the underlying level and could set up a shakeout driven by liquidity before an upward trend can be sustained.

Related: Bitcoin price gained 50% the last time its volatility fell this low

Bitcoin at a Crossroads Moment

Profit-taking appears to have also slowed down. The Net Actualized Profit/Loss metric (NRPL). shows No evidence that large-scale withdrawals have occurred, and the SOPR Adjusted remains below the threshold of 1,10 typically associated with market peaks. These indicators indicate that investors have confidence in the current structure of the market, and they aren’t rushing to lock up profits.

This view is further supported by macro conditions. US Job Openings and Labor Turnover Survey report (JOLTS), released on Tuesday, came out slightly lower than anticipated. This reinforces a “Goldilocks” A risky backdrop is favorable. The consumer confidence has also rebounded following a 6-month drop, reflecting the recovery of investor sentiment.

Bitcoin is in neutral territory, with the Federal Open Market Committee meeting (FOMC), the most likely event to determine the direction of the Bitcoin price. Titan of Crypto commented that the Bollinger Bands were tightening, which is a technical indicator used to measure volatility. These bands often compress when a significant breakout or breakdown nears. Analyst said, 

“Bitcoin in a pressure cooker. Bollinger Bands are squeezing = volatility is drying up. RSI is compressing too. A big move is brewing.”

Related: Bitcoin bulls aim to chase liquidity at $122K, but Q3 seasonality could stall breakouts

This article contains no investment recommendations or advice. Each investment or trading decision involves some risk. Readers should do their own research before making any decisions.