– Bitcoin price is on a tear this week, extending the gains made since spot ETFs started trading in January.
– BTC could nick $60,000 as Glassnode reports relatively strong demand for speculation and trading activity.
– If the king of crypto loses the $50,000 milestone, it could trigger a sell-off, likely going as low as $40,000.
Bitcoin (BTC) price broke out on Monday with upwards of 5% in gains, shattering the
$57,000 level amid hype instigated by news relating to BlackRock and MicroStrategy.In a recent report, Glassnode has revealed key insights that could have a strong bearing on the market.
Also Read:
Bitcoin price peaks at $54,910 as BlackRock spot BTC ETF, IBIT, trades above $1 billion on Thursday
Bitcoin investors increase risk appetite
In a February 27 newsletter, on-chain market intelligence firm Glassnode indicated that the risk appetite among Bitcoin investors has increased, citing “growing signs of speculation appearing across capital flows, exchange activity, derivatives leverage, and even institutional demand.”
The highlight of the Glassnode report was on capital inflows with the report citing a “steady and healthy inflow of capital into the [BTC] asset.” The report notes that the recovery rally for
Bitcoin price is near completion with capital progressively pouring into the BTC market.With this influx, the realized market capitalization of BTC is nearing$460 billion, 3% below its all-time high.
This remarkable performance has seen the profitability of BTC investors improve significantly, with the average investor now holding an unrealized profit of over 120% per coin.
Further, exchange inflow volumes now record levels not seen before, with short-term holders dominating the flows depositing over $2 billion of volume to exchanges per day.According to Glassnode, this points to “a relatively strong demand for speculation and trading activity.”
Another metric that is also recording near all-time highs is the open interest in both futures and options markets.With the sum of all open long and short positions at their peak, directional short-sellers are actively betting against the uptrend.
While Glassnode notes at least $465 million in liquidation volume over the last month, a Monday report by the
FXStreet team cited almost $100 million in shorts liquidated as BTC approached the $55,000 milestone and over $250 million in total liquidations once BTC nicked the $57,000 milestone.
Open Interest, funding rate FAQs
How does Open Interest affect cryptocurrency prices?
Higher Open Interest is associated with higher liquidity and new capital inflow to the market.
This is considered the equivalent of increase in efficiency and the ongoing trend continues.When Open Interest decreases, it is considered a sign of liquidation in the market, investors are leaving and the overall demand for an asset is on a decline, fueling a bearish sentiment among investors.
How does Funding rate affect cryptocurrency prices?
Funding fees bridge the difference between spot prices and prices of futures contracts of an asset by increasing liquidation risks faced by traders.A consistently high and positive funding rate implies there is a bullish sentiment among market participants and there is an expectation of a price hike.
A consistently negative funding rate for an asset implies a bearish sentiment, indicating that traders expect the cryptocurrency’s price to fall and a bearish trend reversal is likely to occur.
Bitcoin price outlook as Glassnode notes heightened capital inflows in BTC market
Bitcoin price continues to hold above $57,000 with prospects for more gains expected with the Relative Strength Index (RSI) inclined north.This suggests rising momentum accentuated by the Awesome Oscillator (AO) and Moving Average Convergence Divergence (MACD), which both remain in positive territory.
Increased buying pressure could see Bitcoin price tag the $60,000 psychological level, 5% above current levels.In a highly bullish case, the leading cryptocurrency by market capitalization could have a chance at retaking its peak price of $69,000.For this to happen, Bitcoin price must foray into the supply zone between $63,329 and $67,999 and break and close above its midline at $65,664 on the daily time frame.Such a move would confirm the continuation of the uptrend.
BTC/USDT 1-day chart
Conversely, early profit taking could see Bitcoin price drop below the $55,000 threshold.If sellers have their way, the decline could see BTC test $50,000.
Notice the Spent Output Profit Ratio (SOPR) position at 2.10 shows that a pullback could be due.As a 30-day moving average (MA), anytime this ratio is above 1 it shows that token holders who are sitting on unrealized profits are leaning toward cashing in on their gains.
The pullback supposition is accentuated by the RSI gliding above 70, which shows that while BTC is not ripe for selling, it is at high risk of correcting as an aftermath of an overbought asset.
Information on these pages contains forward-looking statements that involve risks and uncertainties.Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets.
You should do your own thorough research before making any investment decisions.FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements.It also does not guarantee that this information is of a timely nature.Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress.All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned.The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations.
The author makes no representations as to the accuracy, completeness, or suitability of this information.FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use.Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Join Telegram
Follow us on Telegram
Stay updated of all the news
Recommended Content
Editors’ Picks
Blast gears up for February 29 mainnet launch, crosses $2 billion TVL
Blast, a project designed to support Blur with Layer 2 solutions, is close to its mainnet launch on February 29.Market participants have locked over $2 billion in crypto assets in Blast’s bridge to earn yield and Blast points.
More Blast News
TRON announces partnership with EVM-compatible chain for Bitcoin integration
TRON recently unveiled its roadmap for integrating with the Bitcoin blockchain.
Justin Sun’s X post explains how TRON will take steps to integrate its ecosystem assets with the Bitcoin blockchain and support BTC Layer 2 solutions.
More TRON News
Cardano price notes further decline, report reveals 74% of ADA ecosystem coins are dead
Cardano price continued its decline on Monday.ADA price dropped nearly 3% in the past 24 hours.In a recent report by Alpha Quest, the protocol ranks in the top 10 blockchains that host dead coins.
More Cardano News
Cathie Wood makes headline as Ark Invest dumps $16 million in Coinbase stock
Cathie Wood’s Ark Invest rebalances portfolio according to the latest trade filings.Coinbase shares worth $16 million were offloaded along with $8.2 million in Robinhood shares.
The company also shed stocks of chipmakers like NVIDIA and TSMC.
More Cryptocurrencies News
Bitcoin: BTC likely to correct to $50,000 soon
Bitcoin price has formed a potential top signal that forecasts a sell-off.The weekly chart also points to a bearish divergence, which adds credence to the bearish outlook.Investors can expect BTC to consolidate between the $52,062 to $45,160 levels.
Read full analysis.
