The Lack of Clear Trend in Bitcoin’s Price: Analyzing On-Chain and Derivatives Data
The price of Bitcoin has been trading between $29,900 and $31,160 for the past 18 days, causing concern among investors who are looking for explanations for the lack of a clear trend. Here are the key points to consider:
- Bitcoin ETF expectations faced a harsh regulatory environment
- Negative price pressure due to regulatory actions against leading exchanges
- Bitcoin’s on-chain activity does not show a significant increase
- Bitcoin derivatives improve but are majority neutral
- On-chain and derivatives data fail to support bullish momentum for further price gains
Bitcoin ETF expectations faced a harsh regulatory environment
After BlackRock applied for a spot Bitcoin exchange-traded fund (ETF), some analysts predicted a Bitcoin price of $100,000 by the end of the year. However, regulatory actions against leading exchanges like Coinbase and Binance have created negative price pressure, frustrating traders who were betting on further gains.
Bitcoin’s on-chain activity does not show a significant increase
Despite the initial excitement about the possibility of a Bitcoin instrument being approved for traditional financial markets, blockchain data indicates a stagnation in the number of active users on the Bitcoin network. The number of active addresses has failed to exceed 1 million, and the number of whales accumulating Bitcoin has remained unchanged for the past few months.
Bitcoin derivatives improve but are majority neutral
Bitcoin derivatives metrics and options markets also reflect a lack of confidence from professional traders. The Bitcoin futures premium crossed the neutral threshold, and the 25% delta skew failed to sustain levels below the neutral threshold for more than four days. This indicates a balanced demand between call and protective put options, suggesting a lack of optimism among traders.
On-chain and derivatives data fail to support bullish momentum
Despite the recent price rally above $30,000, on-chain and derivatives data do not support sustained bullish momentum for further price gains. This may be influenced by Bitcoin’s price being significantly below its all-time high and the regulatory actions against exchanges.
Hot Take: The lack of a clear trend in Bitcoin’s price, coupled with stagnant on-chain activity and neutral derivatives data, suggests that the current market conditions may not be conducive to significant price gains. Regulatory actions and investor hesitancy seem to be holding back bullish momentum. It remains to be seen whether the approval of a Bitcoin ETF or other positive triggers can change the current market dynamics.
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