Preview: "Data support the view that Bitcoin trades at a discount, and traders are buying the dip, but charts still warn of a potential sell-off to $106,000."
Key takeaways:
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Buying among retail and whale-sized traders helped slow down the BTC price sell-off, but bears still have a good chance of exploiting long liquidations to $106,000.
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Spot and perpetual futures volumes lack aggression, preventing a lasting trend reversal, and sellers continue to sell into price rebounds.
Bitcoin
bulls are fighting to hold the $112,000 level just a day after the crypto market witnessed its largest single-day long position liquidation for the year. On Monday, $1.62 billion in long positions were liquidated, and as the market attempts to recover, Glassnode analysts warn that the Bitcoin bull market could be entering 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.
Taking a look behind the curtain, the True Retail Longs and Shorts Account (Binance) metric shows retail traders and whales increasing their leverage long positions since Monday, as BTC price sold off, and the 1 million to 10 million cohort anchored CVD and 1,000 to 10,000 four-hour anchored CVD highlight a tussle between buyers and sellers.
Compared against the bid-ask ratio set at 10% aggregate orderbook depth, one can see selling pressure dissipating as BTC price attempts to consolidate in the $113,000 to $111,000 zone.
Related: Bitcoin struggles at $113K as Fed’s Bowman hints at faster rate cuts
Despite buyers showing appetite in BTC’s current range, bulls are not out of the woods yet, and liquidation heatmaps show the price chewing through underlying bid liquidity, with a larger cluster sitting at $107,000.
Taking a wider view of the current Bitcoin-specific market dynamics (excluding macro, spot BTC ETFs and US equities), the day-to-day price action has been majority perpetual futures market driven.
Open interest has fluctuated within the $46 billion to $53 billion range from late July 22 until this week, and barring recoveries from range lows at $112,000 (Aug. 3) and $107,000 (Sept. 1), buy volume within spot markets and aggressive use of long leverage in the perps market are largely absent.
Such a situation, where longs are hesitant to turn up the volume in spot and futures markets, heightens the odds for sellers who may attempt to push the price into leveraged longs at risk of liquidation from $110,000 to $106,000.
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