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Bitcoin Bear Market Not Turning Bullish Anytime Soon: Report

The current crypto winter has left bearish sentiments on Bitcoin and other crypto assets in the market. As a result, several, if not all, assets’ values are on their way to the bottom, leaving massive losses for retail and institutional crypto investors.

Experts have released several speculating analyses regarding the ongoing bear market, including the condition of Bitcoin and possible future expectations. Bitcoin price remains at the $19k level, never exceeding $24k in the past months. Following the ongoing price trend, a prolonged decline is possible.

Reason One: Lack Of Demand And Activities In Bitcoin Futures Market

Market analytics believe the Bitcoin market may not end soon with the current trend. A CryptoQuant analyst said the lack of demand for Bitcoin is one of the signs that the asset prices are not increasing soon.

The analyst highlighted the rate of funding in the BTC futures market. He explained that BTC funding rates became negative when Bitcoin price fell from the $22k level and remained at the $19k level.

The CryptoQuant analyst further noted that the metric’s values are notably lower in 2022 than in 2019-2020. It indicates a low demand and activity in the futures market, which causes a consolidation period and range phase.

The analyst advised close monitoring of the metric’s values, particularly in the short-term, giving reasons. He said extreme negative values might increase the possibility of a short-squeeze, which could cause a price reversal for the cryptocurrency.

Reason Two: Short Term Sentiments Remain Bearish

Another CryptoQuant analyst said the on-chain participants’ short-term sentiments are still bearish. The analyst explained the bearish sentiments exist because Spent Output Profit Ratio (SOPR) for the short-term is below one (1).

The analyst said everyone who purchased Bitcoin holdings after December 2020 BTC high is at a loss. For this reason, it would be hard for long-term holder SOPR to turn positive soon. In the current market, short-term SOPR is more informative than SOPR/SOPR, which combines long-term and short-term data.

Although the Bitcoin bear market comes with periodic price depreciation and reduced volatility, it presents an opportunity for new BTC investors. Buying when the prices are low and holding till the prices rise is one of the trading strategies in crypto.

The DBS Bank, a financial service provider in Singapore, said Bitcoin remains an unmatched investment opportunity despite the bear market. DBS senior vice president and investment strategist Daryl Ho commented on the issue.

Daryl said he believes Bitcoin to be unique regardless of the price changes. He further said the central clearing party trade verification makes crypto investments a better opportunity than fiat investments.

The DBS executive said the fiat monetary system is governed by central banks, while crypto assets trades get verified via a central-clearing party. He also cited BTC’s 13-year-long record as a boost to investors’ confidence.

Bitcoin gearing up for a bull run l BTCUSDT on Tradingview.com

Meanwhile, Bitcoin still maintains its $19k level and is currently trading at $19,530 with a low of $19,118.

Featured image from Pixabay and chart from TradingView.com

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Crypto Shorts See $240M Flush As Bitcoin Rebounds Back Above $30k

Data shows the crypto futures market has taken a $380 million beating over the past day as Bitcoin has rebounded above $30k. Out of this amount, $240 million liquidations have belonged to short traders.

Crypto Shorts Observe $240 Million In Liquidations Over Last 24 Hours

In case anyone isn’t aware of what “liquidations” are, it’s best to first take a brief look at the workings of margin trading in the crypto futures market.

When an investor opens a, say, Bitcoin long or short contract at a derivatives exchange, they first have to put forth some collateral called the “margin.” This margin can be in BTC, any other coin, or even fiat.

Against this margin, the investor may choose to take on “leverage,” a loaned amount often many times the initial position.

The advantage of leverage is that if the price moves in the direction the contract bet on, the profits earned are then many times more now.

Related Reading | Bitcoin Bloodbath Awakens Sleepy Giant As Spot Volumes Surge

However, it is also true that any losses incurred will also be multitudes more. When such losses eat up a specific portion of the margin, the exchange forcefully closes off the Bitcoin position.

This is what a liquidation is. The below table shows the data for liquidations in the crypto market over the past day.

Looks like liquidations in the futures market have amounted to about $380M In Last 24 Hours | Source: CoinGlass

As you can see above, the crypto market has suffered some heavy liquidations over the past day, with $184 million coming in the past 12 hours alone.

A majority of the liquidations have been from short traders, which makes sense as coins like Bitcoin have observed a big rebound in the price today.

Around 63% of the liquidations have involved shorts | Source: CoinGlass

Looking at the above data, it seems like more than $240 million liquidations have been short traders getting flushed.

Related Reading | Bitcoin Crash 20% in 5 Days. Why is it the Golden Time to Enter the Crypto Market?

Large liquidations like today’s aren’t particularly uncommon in the crypto market. There are a couple of reasons behind this.

The first is the high volatility of coins. Even the biggest coins like Bitcoin and Ethereum can observe rather large swings in a short timespan.

The other factor that contributes to this is the fact that many derivatives exchanges offer as high as even 100x leverage.

Uninformed traders opting for such large positions in a volatile market like crypto greatly increases the risk of liquidations.

Bitcoin Price

At the time of writing, Bitcoin’s price floats around $30.5k, down 15% in the past week.

The price of the coin seems to have already observed a rebound from the crash | Source: BTCUSD on TradingView
Featured image from Unsplash.com, chart from TradingView.com

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Bitcoin Futures Overheat With $1.5 Billion Jump As BTC Breaks $44k

On-chain data shows Bitcoin futures open interest has jumped up more than $1.5 billion in just a few hours as the crypto’s price breaks past $44k again.

Bitcoin Futures Open Interest Adds More Than $1.5 Billion Within A Few Hours

As pointed out by an analyst in a CryptoQuant post, the BTC open interest has shot up over the past day as the coin’s price has observed a surge.

The “open interest” is an indicator that measures the total amount of Bitcoin futures contracts currently open on all derivatives exchanges.

When the value of this metric is rising, it means more futures positions are opening up on exchanges. This leads to higher leverage in the market, and can result in more volatility.

On the other hand, the open interest’s value going down suggests investors are closing up their positions as they pull out of the market. As leverage lowers during this trend, it can lead to lesser volatility in the price of Bitcoin.

Now, here is a chart that shows the trend in the Bitcoin open interest over the past month:

Looks like the value of the indicator has surged up over the past day | Source: CryptoQuant

As you can see in the above graph, the BTC open interest observed a sharp rise within the last 24 hours as the coin’s price enjoyed an uptrend.

Related Reading | Ethereum Will Continue To Outperform Bitcoin, Here’s The Indicator That Says So

The value of the metric jumped more than $1.5 billion in just the matter of a few hours, taking the total open interest to $13.6 billion.

Also, as the chart shows, there were two similar sharp spikes twice within the past thirty days where the price also saw an increase.

Related Reading | Quant Explains How Stablecoin Ratio Can Give Bitcoin Buy Or Sell Signals

However, not long after this trend, the price plummeted down along with the open interest. If similar trend follows this time as well, the current uplifted value of the coin may not last long before a retrace is seen.

Though, there is a chance that things go differently this time. The increase in the Bitcoin open interest is much sharper than the other instances.

BTC Price

Yesterday, Bitcoin’s price broke past $44k for the first time since start of March. So far, the coin has maintained above this level as at the time of writing, it floats around $44.6k, up 10% in the last seven days.

Over the past month, the crypto has gained 15% in value. The below chart shows the trend in the price of the coin over the last five days.

The price of BTC seems to have observed some sharp uptrend over the last few days | Source: BTCUSD on TradingView
Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com

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$170 Million In Futures Liquidate As Bitcoin Recovers Above $38k

Data shows more than $170 million in Bitcoin futures has liquidated over the past 24 hours as the price of the crypto makes sharp recovery above $38k.

BTC Price Makes Sharp Recovery From Crash Due To Russia’s Invasion Of Ukraine

Following the commencement of the Russian invasion of Ukraine yesterday, the price of Bitcoin took a deep plunge down as investors pulled out of the market. During this crash, the coin’s value went as low as $34.4k.

However, today the value of the crypto already seems to have made some sharp recovery as the price hit $39k earlier in the day.

At the time of writing, Bitcoin’s price floats around $38.8k, down 4% in the last seven days. Over the past month, the crypto has gained 7% in value.

The below chart shows the trend in the price of BTC over the last five days.

BTC’s price has made some sharp recovery today | Source: BTCUSD on TradingView
Bitcoin Futures Liquidations Over The Past Day Reach More Than $170 million

Due to this sharp price rise, there have been some mass liquidations in the futures market. In case someone isn’t familiar with what a “liquidation” is, it’s best to get a quick overview of margin trading first.

As you may know, when investors purchase a buy or sell futures contract on a derivatives exchange, they have to put forth some initial investment, called the “margin.”

Against this margin, users can loan Bitcoin amounts many times their actual position. This is called making use of “leverage.” Any profit that investors earn on this leverage is theirs to keep.

Related Reading | Bitcoin Investors Haven’t Responded To Russia-Ukraine War With Large Inflows (Yet)

However, if the price of the coin moves opposite to the direction they bet on, then their losses are also as many times more in magnitude as the leverage. After the user loses a large percentage of their margin because of these losses, the exchange forcibly closes the position. This is precisely what a “liquidation” is.

Now, here is the latest data regarding the Bitcoin futures liquidations:

Looks like the futures market has observed some mass liquidations over the past day | Source: CoinGlass

As you can see above, more than $170 million in Bitcoin futures contracts have been liquidated over the past 24 hours.

Related Reading | Bloomberg Strategist: This Is The Defining Moment To Buy Bitcoin

Since these liquidations took place because of a sharp price move up, the majority of these are from short contracts.

While this is a sharp and unexpected recovery for the crypto, it’s unclear how long it will last. The macro fears and uncertainties due to the Russia-Ukraine war are still abound at large as the invasion still rages on.

Featured image from Unsplash.com, chart from TradingView.com

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Bitcoin Futures Basis Hints At Possible Disbelief Rally

Bitcoin has recovered back to $42,000 since the dump after recording a bearish trend. Since then, sentiment, as well as momentum, has since turned towards the positive, leading the digital asset back on the path to a bull rally. But this does not tell the whole story. In this report, we take a look at the bitcoin futures basis, where it’s at, and what it currently says about sentiment among institutional investors.

Institutional Investors Getting Bullish?

Institutional investors may be getting bullish based on what the bitcoin futures basis is saying. Although there has not been much change in the futures basis despite the recent strength displayed by bitcoin, it still helps to take a look.

Related Reading | Bitcoin Settles Above $43,000, But What Does The 4-Year Cycle Say?

Mainly, derivatives trades remain on the fence. The CME’s basis has also been stabilizing around 3%, in addition to the gap between the CME and the offshore market continuing to narrow ever more slightly. As for the three-month basis in the offshore venues, it remains stable, still circulating around the 3.5% to 5.5% level. It sits below the recorded level for the previous week though.

BTC trading below $44K | Source: BTCUSD on TradingView.com

CME’s front-month contract is now trading above the offshore market. This is a significant milestone in the fact that this is rare. The last time the front-month contract on CME was trading above the offshore market was in October of 2021. This could mean that institutional investors are starting to look at the market through a more positive lens, which could turn bullish going forward.

Bitcoin Futures Basis Is Rising

The bitcoin futures basis has been rising as evidenced across various crypto exchanges. There could be a number of reasons for this but it could also be a direct result of growing inflows into some of the futures-based ETFs that were approved last year. BITO alone had seen a total of 135 March contracts on Monday. This could also be seen as a contributor to the growing basis.

Related Reading | Bitcoin Flips $44k To Support, Bulls In Longest Rally Since September

Bitcoin futures annualized rolling 3-month has been on the rise, with FTX leading the charge. Usually, Binance, the world’s foremost leading crypto exchange, would be the highest but not this time.

Binance trading below FTX | Source: Arcane Research

FTX has seen a 5.36% on its bitcoin futures annualized rolling 3-month basis. Binance is trading below this basis at 3.92%.  Others are Deribit, BitMEX, and the CME, all coming in at 4.41%, 3.81%, and 2.76% respectively.

These numbers point to brewing momentum even though the futures basis has remained mostly flat. With price picking back up on the charts, derivatives traders may begin to come off the fence, most likely stepping into the bullish territory.

Featured image from MARCA, charts from Arcane Research and TradingView.com