Bitcoin drop to $106k likely due to weak spot, perps volumes

Takeaways from the conference:

• The BTC sell-off was slowed by the buying of retail traders and large whale-sized investors, but bears have good chances to exploit long-term liquidations up to $106,000. 

• The volume of spot and perpetual futures is not aggressive, which prevents a trend change that will last. Sellers continue to buy into price increases. 

BitcoinBTCBulls battle to keep the level of $112,000 just one day after crypto markets saw its highest levels. largest single-day long position liquidation The year is looking good. Glassnode’s analysts warned that as the Bitcoin bull could enter its “late-cycle phase.”   

Despite BTC briefly holding above $112,000, aggregate cumulative volume delta data from Hyblock shows sellers continuing to dominate the price action, elevating the chance for a deeper sell-off closer to the range lows.

Looking behind the scenes, True Retail Longs and Shorts Accounts (Binance), a Binance metric, show retail traders and whales have been increasing their leveraged long positions as BTC prices fell. In addition, CVDs anchored at 1,000,000 to 10,000,000 and CVDs anchored between 1,000 and 10,000 over a 4-hour period highlight the struggle of buyers and sellers.

As BTC attempts to stabilize in the zone between $113,000 and $111,000, the pressure to sell is waning.

    Related: Bitcoin struggles at $113K as Fed’s Bowman hints at faster rate cuts

The price is still eating through the underlying liquidity, and a large cluster of buyers are at $107,000.  

If we take a broader view of current Bitcoin market dynamics, (excluding macro and spot BTC ETFs as well as US equity), then the daily price movement is largely driven by perpetual futures.

From late July 22, until this week’s open interest, the price range has been $46 to $53 Billion. Aside from recoveries at range lows of $112,000 and $107,000, respectively, the buy volumes in spot markets, as well as the aggressive use long leverage on the perps are mostly absent. 

In a scenario where sellers are reluctant to raise the volume of the market, they may try to lower the leveraged price for longs, putting them at risk.

The article is not intended to provide investment advice. Risk is inherent in every investment decision and trade. The reader should always do research prior to making a final decision.