After several months of stagnation, we are seeing signs of a Bitcoin revival!
The uptrend seems to be gaining strength again and the purchasing power, long dormant, is awakening. Amid profit-taking, rising open interest and investor caution, there is optimism! But questions still arise. Since then, some elements of the market still remain fragile.
Let’s explore together the key elements behind this recovery in this new Bitcoin newsletter!
Bitcoin: First in months!
Since the beginning of September, we have seen a signal that the market has been waiting for a long time: an increased desire to buy bitcoins, which has persisted over time.
Already during the past month, we have witnessed efforts to overcome the selling pressure that dominated the market. And despite a slow start to the quarter, we can see that the trend seems to be picking up again.
It is also the first time in several months that we have seen a significant increase in the supply held by short-term holders (STH). These investors who have held BTC for less than six months are often the first to react to market movements and their behavior is therefore a key indicator to watch.
We have seen an 8.5% increase in supply from short holders over the course of a few days. This seems to show us that things are going in the right direction!
This type of rapid rise is an encouraging sign that we haven’t seen since last January. This potentially indicates that investors are ready to re-enter the market, ready to accumulate BTC.
Rising profits – can the market keep pace?
However, this bull run is accompanied by a significant increase in profit taking. When the price of Bitcoin hit $68,000, a level not seen since last June, investors took the opportunity to sell more than usual.
Since June, daily profit-taking has been around $300-$600 million per day, even during the bullish recovery.
While here we have seen this profit taking climb to $1 billion per day! Something we haven’t seen since June. What is notable here is that this profit-taking is coming from both short-term and long-term holders (LTH). This raises an important question: does the market have enough strength to sustain this uptrend, or could this wave of profit-taking halt the advance? We’ll have plenty to watch in the coming weeks!
Open Interest is soaring, but is it really dangerous?
Another metric to watch closely is open interest (OI). Although we are only 5% ATH OI, which is synonymous with the market correction in recent months, it is important to adjust the analysis.
Historically, OI tops have often marked the tops of local markets because they create excessive volatility due to heavy leverage. However, we have noticed for several months that the increase in OI is largely driven by the US CME (+28% since the beginning of October), rather than platforms such as Binance, where OI increased by 13% over the same period. period.
This could mean that the increase in OI is mainly due to financial institutions, rather than “degen” traders (speculators taking highly leveraged positions), making OI less volatile.
Why is this important? This suggests that while the amounts tied up in USD or BTC are significant, they are created primarily by institutions that tend to use less leverage. As long as the share of institutional IOs continues to grow, the market should remain relatively stable.
Bitcoin: Indexes are piling up
The market is showing positive signs with a recovery in purchasing power that we haven’t seen in months. The increase in the supply held by STH is an encouraging sign and the increase in profit taking shows that investors feel confident enough to take profits.
However, it will remain to be seen whether this upward momentum is strong enough to not be slowed by these massive profit takings.
The increase in OI, while high, appears to be less of a concern than in the past, but it is therefore necessary to monitor this trend in the coming weeks. In particular, the ratio between institutional traders and individual traders.
The market appears to be well positioned for an upward recovery, but as always with Bitcoin, nothing is ever a foregone conclusion. Let’s stay optimistic, but watch out for future moves!
To be continued in the coming days…