- BTC’s Open Interest declined and selling pressure seemed dominant across the Futures market
- A few metrics supported the bulls, but the rest suggested otherwise
Bitcoin [BTC] fell victim to a price correction over the last 24 hours as its price declined by more than 1% on the charts. At press time, it was still trading above the $28,000-level with a market capitalization of over $542 billion.
A CryptoQuant analysis from 5 April outlined the reason behind this decline in a recent blog post.
Read Bitcoin’s [BTC] Price Prediction 2023-24
The reason behind BTC’s price decline
Crazzyblockk, an author and analyst at CryptoQuant, mentioned in his analysis that a reliable way to analyze BTC’s price action is with the profits earned by short-term holders.
According to the analysis, the value in short-term holders’ pockets typically increases near the price bottom. And, the need for Bitcoin’s sustained price growth depends on how these players act and how profitable they are. Therefore, a look at the behavior of short position traders can help gauge the reason behind BTC’s latest price decline.
Liquidations on the rise!
CryptoQuant’s data revealed that selling pressure was dominant across the derivatives market, which was evident from BTC’s taker buy/sell ratio. More than 15 million long positions were liquidated in the last 24 hours, indicating higher selling pressure.
The increased liquidations in the market could have also played a part in pushing Bitcoin’s price down in the last 24 hours. Additionally, the trend reversal was also supported by decreasing Open Interest, which was bearish for the king of cryptos.
Source: CryptoQuant
Is a bigger downfall inevitable?
Though the ongoing market looks troubling for BTC, things might turn in favor of the crypto soon. BTC’s exchange reserves, for instance, have decreased – A sign of low selling pressure. The total number of active wallets used to send and receive coins has also increased, which is by and large a positive signal. Here, it is also interesting to note that a whale received BTCs worth $500 million, reflecting high confidence in the king coin.
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A similar trend of accumulation is also evident from a look at Santiment’s chart. Bitcoin’s supply on exchanges declined over the last seven days while its supply outside of exchanges rose steeply. This is a typical bull signal – A sign of investors’ confidence in BTC.
Source: Santiment
Caution is advised
Though a few of the metrics were in the bulls’ favor, nothing can be said with utmost certainty.
For instance, BTC’s MVRV Ratio declined over the past week, which was bearish. Moreover, weighted sentiments also drifted towards the negative side, indicating lower trust among Bitcoin investors.
Source: Santiment