Bitcoin Bounce Fails Again: This is Why

The key takeaways

• Retail traders buy BTC at a discount in the spot and futures market, but larger investors are selling net to prevent a price recovery.

• The risk of another cascading liquidation to $105,000 is less probable, however investor sentiment has not matched the trend in various cohorts of cumulative volume data.

BitcoinBTCEtherETHThe price of each cryptocurrency is recovering, and trying to recover its ranges lost in the recent sharp drop on both Saturday and Sunday. Bitcoin is only up 2.4% from its $108 665 low. ETH, on the other hand, has risen 8.26%, to a new daily high of $4,663, from its $4,310 low.

The data shows that a variety of traders are buying BTC at the bottom, but BTC’s price is still stuck in its downtrend. This is a net buy for retail traders. The aggregated anchored cumulative volume of the 1K-10K cohort shows this. 

The chart below shows that whale and institutional traders (between 1 million and 10 million) sold BTC in this time period, but the level of selling has decreased as BTC prices have reclaimed $111,000 territory. 

The CVD data reveals that retail traders on Binance’s Bitcoin perpetual and spot futures markets have opened long positions throughout the decline, while whales and large institutional investors are net sellers.

In the same time period, retail traders on the Coinbase Bitcoin market were also active. Volumes reached $101.253 millions in net purchasing, while institutional investors, at Coinbase and Binance, have been net sellers, as perps markets have unloaded approximately $7.5 Billion. 

It is clear that whales are driving the price down, while smaller players and retail buyers try to support the prices. They seem to think they’re either getting Bitcoin for a discount or betting on a mean-reversion to between $117,000 and $118,000 in a short time. Despite this, Bitcoin continues to languish in a short-term downtrend despite a positive,smaller-order CVD at Binance and Coinbase. 

Related: BlackRock Bitcoin ETF holdings overtake Coinbase, Binance; ETH may be next

What comes first: $120,000? Or $105,000?

Hyblock’s liquidation heatmap shows that Bitcoin is absorbing bids between $111,000 and $110,000 during the weekend sale-off. Another cluster can be seen near $104,000.

Although a collapse to the lowest cluster of liquidity seems unlikely, current dynamics that see larger orders selling outweigh the retail cohort continue to exert pressure on BTC’s price. 

 The traders who are hoping to experience a consolidation period should closely monitor the aggregated CVD anchored daily. They will be able to tell if there is a reduction in this selling pressure and whether a similar change in volumes corresponds with a shift of sentiment from investors. 

The article is not intended to provide investment advice. Each investment or trading decision involves some risk. Readers should do their own research before making any decisions.