As the Bitcoin market navigates the choppy waters around $26,000, there are several metrics to keep an eye on. After hitting a low of $25,374 yesterday, the bulls have managed to push the price back up, though the market remains in a fragile state after last Thursday’s price crash.
Currently, the Fear and Greed Index for Bitcoin stands at 37, indicative of strong fear permeating the market. Typically, such a low level on this index indicates that market participants are concerned about the near-term future, often leading to a kind of self-fulfilling prophecy where selling pressure builds.
An in-depth look at Bitcoin CVDs and Delta
Renowned analyst Skew has done just that marked the role of Cumulative Volume Delta (CVD) in understanding current market dynamics today. “BTC Aggregate CVDs & Delta Reveal Spot Seller Limit Here, With Shorts Pushing for Control.” This means that even if traders want to buy at market prices (takers), those who want to sell set limits, adding a cap to any near-term bullish momentum.
The specific price point to note here is $26,100. “This level has acted as a magnet for limit sellers,” notes Skew, “and is supported by the pattern seen in spot CVD versus price so far.” In other words, spot takers are absorbed by limit sellers at this price, limiting the upward movement.
Perpetual CVD (Perp CVD) also deserves attention as it “moves lower in line with longs closing and new shorts coming in.” This suggests that traders are not only hedging their long positions, but also opening new short positions, in line with the current bearish price action.
Examining specific exchanges like Binance and Bybit gives further granularity to the analysis. According to Skew, “Longs flushed below $25,800 during that period, marking that level as a major pivot point.” Open Interest (OI) on Binance saw a drop of 6,000 BTC, and Bybit OI fell by 3,000 BTC – all in long positions being liquidated.
The liquidation of long positions at these levels poses a clear risk to any bullish scenario. “The clear risk to longs is below $25,800,” claims Skew, making it an essential level to watch for traders who are net long.
MacroCRG, a renowned market analyst, added on the analysis that a large number of longs were re-liquided during yesterday’s BTC dip: “More pain for #Bitcoin longs as another $300M+ in open interest was wiped out overnight by a downward move. When will it end?”
There could be a bright spot, however, as Skew puts it: “We’ll probably see monkeys raging soon.” But so far, Bitcoin’s open interest (OI) remains flat after Thursday’s flush. OI currently stands at $10.88 billion (after over $14 billion).
BTC’s OI-weighted financing rate has already turned positive again at +0.0060. If the value turns negative for a few days, as it did before the March 2023 rally, it could be a sign that a short squeeze is on its way. However, after Thursday’s crash, the benchmark remained in negative territory for only a short time.
BTC short term holders and speed
On-chain specialist Axel Adler Jr. points shows that the cohort of Bitcoin holders (STH) has reduced their holdings by a significant 400,000 BTC in the short term. This mass exodus has put significant selling pressure on the market, “underwatering” many STHs and making them less likely to engage in bullish behavior as a result.
Furthermore, Adler highlights the BTC Velocity metric, stating, “At the beginning of this year, BTC Velocity metric fell to the minimum level.” This extremely low speed indicates not only low volatility, but also a lack of activity from market participants – a worrying sign of an impending bullish turn. Therefore, Adler concludes:
Taking these two factors into account, and with the fact that the STH cohort has traditionally been the main player causing volatility in the BTC market, the recovery from this decline will take longer than usual and may take an indefinite period of time .
At the time of writing, BTC was trading at $26,114.
Featured image from iStock, chart from TradingView.com