Bitcoin markets were tense as Open Interest topped $60 Billion, a record high, and supply constraints continue to tighten. Bitcoin price USD saw a massive surge as sentiment rose and BTC hit another new ATH of around $97,777.
Active traders were realising profits by selling. However, consistent demand doesn’t allowed those prices to drop significantly, instead keeping them reasonably stable.
At the same time, the exchange reserve is still falling, which suggests a possible supply shock.
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Earlier this week, Bitcoin price USD tipped into a record high of $97,545.63. Strong market optimism has provided fuel to this rally as analysts draw up targets north of $100,000 in the coming days.
While this bullish sentiment holds, some BTC holders and miners are beginning to cash out, ramping up selling pressure and possibly causing a pullback to $78,000.
The current Bitcoin price is $97,545.63, rising by 0.08% in the last 24 hours.
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Open Interest Surges, Amplifying Market Leverage and Risk
Bitcoin’s aggregated open interest now stands at $60 billion, up 50% in 2021. This milestone represents the fast-progressing importance of derivatives trading. It is pushed on by platforms such as Binance, CME, Bybit, and Bitget.
In the latest Bitcoin price and market capitalization during Bitcoin’s all-time high of $69,000. The open interest to market cap ratio was 2.2%, whereas today it surged up to 3.3%, revealing more leveraged positions in the market.
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Bitcoin derivatives markets have seen a surge in capital inflows over the past 90 days, driven primarily by Tether (USDT). This comes while whale positions remain relatively flat, as the last major long positions were recorded at $84,000 to $85,000.
We are seeing stability among them, which might be considered a prudent approach to the current price pattern as they monitor the market for opportunities or risks. But the rise in leveraged trading makes liquidations that can lead to sharp price swings like this more likely.
Profit-Taking Balances Demand, Stabilizing Bitcoin Price USD
As Bitcoin nears the critical $100,000 psychological threshold, market participants are realizing profits mostly. This activity is in line with historical patterns in which a major price historical milepost sparks increased selling behavior.
Nevertheless, Bitcoin’s robust demand for now has thus far absorbed this selling pressure. It ensures a relatively stable price in spite of more heightened activity.
These are the phases when the market’s cyclic nature becomes apparent short-term volatility that is typically triggered by profit-taking. You’ll also see similar spikes based on historic past bull runs, particularly within the close-to-key price levels.
With Bitcoin approaching $100k, a sales rally seems most imminent. It will put the very stability of the market to the test. Selling pressure, however, will need to be balanced through strong demand to avoid a price correction.
Shrinking Exchange Reserves Signal a Looming Supply Shock
Since the current bull run began, Bitcoin exchange reserves have decreased systematically. However, in contrast to previous cycles in which reserves increased alongside prices.
This is a sign that Bitcoin long-term holders are transferring their Bitcoin to cold wallets or perhaps sitting it out in the market. Since the liquid supply on exchanges is being reduced by this behavior, it is actually creating a supply crunch that strengthens price movements.
Investors are hoarding, and Bitcoin is flowing out of exchanges. It’s important to note that this trend also creates a deficit of supply to trade with as demand continues to rise. In the past, periods of high price increases were accompanied by increasing reserves of exchange as traders seized on the rising momentum to take profits.
However, the current dynamic indicates that long-term holders believe there is still more to be gained on price appreciation, so long-term holders are betting the market will hard so nearby supply shock.
Bitcoin Consolidates Near $91K Amid Reduced Momentum on 4H Chart
Bitcoin 4-hour time frame chart shows a horizontal rectangular box, which is a consolidation phase of a box. A series of candlesticks formed within a tight range indicates that the price is seeing reduced volatility following a strong trend.
The price action remains above the blue Alligator line (representing a smoothed moving average), showed underlying bullish sentiment but with weakening momentum.
An apparent resistance zone near $92,500 and support around $90,366 is shown on the chart and coincides with the boundaries of the consolidation box.
The Money Flow Index (MFI) is at 46.27, which indicates neutral momentum and equilibrium between buyers and sellers.
The MACD histogram is bearish, as the MACD line (blue) is below the signal line (orange), indicating reduced bullish momentum and hence the possibility for an immediate correction.
Disclaimer
The information provided in this article is only for educational and informational purposes and should not be considered financial or investment advice. We are not licensed financial advisors. Always conduct your research and seek guidance from a certified financial professional before making any investment decisions.
