- A few hours after the accumulation of 4.6% circulating BTC, the price dropped again.
- Long liquidations increased even though shorts positions increased.
Recently, Glassnode reported that about 780,000 Bitcoin [BTC] investors filled their buy orders at a spot price of $26,800. However, the action seemed to be the wrong one as BTC declined by another 5.8%. This plunged the total number of coins in losses to 1.26 million.
The recent #Bitcoin move downwards from $27.3K to $25.8K (-5.8%) has caused the percent supply in profit to decline from 69% to 62.5% (-6.5%), plunging a further 1.26M coins into loss. https://t.co/anTps0tpRk pic.twitter.com/iPLZ64tU4n
— glassnode (@glassnode) June 5, 2023
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For many in the crypto ecosystem, employing the Dollar Cost Averaging (DCA) system is a great tactic to win over the market in the long term. But in the short term, there are usually concerns about assets moving in either direction.
Shorts thriving; longs in the “red pool”
An undeniable reason for the fall is the crises facing Binance. Recall that on 5 June, the SEC threw the crypto community into panic mode, releasing a statement that it was suing the exchange.
As the world’s largest exchange, Binance records billions of dollars in volume. But according to Watchers’ data, over $1.4 billion, representing 2.6% of its total reserves, had left the exchange since the announcement. Surely, these outflows included BTC.
With such selling pressure, it was unavoidable for the king coin to not feel the effect. This has also spread to the overall crypto market cap, which decreased to $1.09 trillion.
Consequently, traders attempted to take advantage of the situation. According to Coinglass, the long/short ratio became 0.84 moments after the public got wind of the problem with the regulators.
Source: Coinglass
A ratio above one meant that there are more long positions than shorts. Thus, there was more positive sentiment in the market. But with the ratio sliding below the value mentioned, the number of short positions outnumbered long contracts.
Therefore, the broader expectation was negative.
Despite the increase in short positions, the liquidation heatmap showed that BTC’s wipeout in the last 24 hours was over $110 million. According to data from the derivatives portal, longs suffered the most.
Source: Coinglass
Bulls have the lost support
Before the whole heat the market dealt with, Benjamin Cowen opined that BTC might have reached a local short-term top. Speaking to his 783,000 YouTube subscribers, Cowen suggested that Bitcoin might have lost its bull market support band on the new weekly close.
Historically, the indicator has been great in identifying market shifts. When the price goes below the band, then it means BTC had strolled into the bear phase. But when it breaks above it, the price tends to be bullish.
Cowen said:
“It’s worthwhile to leave open the possibility that June could show some renewed strength. But that’s more like a secondary case in my opinion.”
How much are 1,10,100 BTCs worth today?
Furthermore, on-chain data showed that the seven-day Market Value to Realized Value (MVRV) ratio had decreased to -3.771%. When the metric increases, it means that more participants have made profits and were willing to take gains.
But when it breaches the positive region, it means that the market holds a bunch of unrealized losses. However, the broader market looked ready to get over the disturbing occurrences as weighted sentiment grew to 0.775.
Source: Santiment