Bitcoin Enters Consolidation Phase
Right now, there’s a lot of uncertainty surrounding Bitcoin (BTC) as it hovers around the $37,000 range. According to the latest Bitfinex Alpha report, BTC is facing decreasing momentum and positive funding rates on futures contracts, typically signaling market declines. The potential for selling pressure from short-term holders realizing profits is also a concern.
Bitcoin’s Recent Movements
Despite four weeks of positive movements, Bitcoin recently recorded a negative weekly close. An attempt to rise past $38,000 was cut short due to futures and spot market trading activities. The Cumulative Volume Delta (CVD) metric was negative as BTC’s price rose, indicating substantial profit-taking, along with a decrease in open interest. There was also a notable “wall of limit sell orders” in the spot market.
This drop led to the highest hourly trading volume seen since the initial surge to the $38,000 mark, prompting caution from Bitfinex. They warn that although it may seem like a cooling-off period, investors should approach the situation carefully.
Tightening in BTC Supply
Surprisingly, major altcoins have outperformed BTC, rallying as the leading digital asset experiences a concentration of supply among various investor cohorts. On-chain analysis reveals a significant tightening in BTC’s supply as the fourth halving event approaches.
Bitfinex noted that current supply concentration is in the hands of long-term holders, which is reflected in the inflated short-term holder age band, paired with the increase in BTC’s price this year.
Supply and supply storage rates indicate that long-term holders are accumulating BTC at a faster rate than new BTC production. The supply storage rate exceeds new BTC issuance by over 200%, reaching unprecedented levels in history.
Hot Take: What’s Next for Bitcoin?
Despite its consolidation, Bitcoin is facing uncertainty and downward pressure. As BTC’s supply continues to tighten, it remains to be seen how this will affect its value and position in the market. Observers advise caution and close monitoring of the situation to make informed decisions in the coming weeks.
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