Bitcoin Breaks Below Price Range, Onset of New Bull Market
After being trapped between $31,500 and $29,500 for over a month, Bitcoin has finally broken below the price range. This can be attributed to a lack of positive stimuli in the market. However, higher timeframe on-chain metrics are still signaling a bull market.
Key Points:
- Bitcoin’s current market price is higher than its realized price, indicating that market participants are in profit and likely to hold their positions.
- Reclaiming a position above the Realized Price usually signals the beginning of a new bull market.
- The creation of new Bitcoin wallets, as indicated by the 30-Day SMA surpassing the 365-Day SMA, often coincides with the start of bull markets.
- The Bitcoin market realizing more profits than losses is another positive sign for a bullish market.
- Despite the downward price movement, the derivatives market remains unchanged, suggesting minimal variation in the long-term fundamentals.
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Derivatives Market Continues to Dominate Scene
While the recent price breakdown did induce a slight increase in volatility, there hasn’t been a significant change in the order flow and options behavior of buyers and sellers. Although technical traders may interpret the rejection of an attempt to break back inside the defined trading range as a bearish sign, the overall fundamentals remain unchanged.
Key Points:
- Open interest in the derivatives market surged by 7.5% after Bitcoin’s breakdown from the range.
- Funding remained positive favoring shorts.
- The downward range break resulted in fewer liquidations compared to typical cascades seen with Bitcoin.
- A negative Cumulative Volume Delta (CVD) suggests more action from sellers amidst low demand, indicating low volatility.
- The derivatives market continues to dominate Bitcoin’s price movement.
Hot Take:
While the recent price breakdown may have been discouraging, the overall outlook for Bitcoin remains positive. The on-chain metrics and the creation of new wallets suggest that we could still be in the early stages of a bull market. Additionally, the derivatives market’s behavior indicates minimal variation in the long-term fundamentals. Therefore, it’s important to consider the bigger picture and not be swayed solely by short-term price movements.
