- Trends fueled by bank collapses are turning the demand for Bitcoin in derivative markets into an advantage.
- Selling pressure could set the upper limit of the recent rally and trigger some long-term liquidations, but investors are holding on.
This month’s market events can teach investors a lot about the characteristics of demand for Bitcoin. The same observations can be useful when making informed market decisions. In summary, Bitcoin’s jump on March 10 was fueled by an increase in accumulation due to a loss of confidence in the banking sector.
Demand for Bitcoin (BTC) is Increasing!
Higher confidence is particularly evident in derivative markets. Binance’s open position and funding rate metrics confirmed a strong flow of demand from derivative markets to a new monthly high on March 12 and returned on March 19.
Source: CryptoQuant
Both metrics confirm a strong flow of demand from derivative markets. But how to use leverage for demand? Bitcoin’s estimated leverage ratio also returned to other derivative markets. It has increased slightly, indicating that market confidence is still not high. However, it may also indicate that there are still relatively few people who want to use leverage.
Source: CryptoQuant
The best example of the impact of leverage on the market is its effect on price changes. For example, long-term liquidations rose to 304.54% as selling pressure increased on March 22. In addition, short positions have decreased significantly in the last few days.
Source: CryptoQuant
The Bear Story of Bitcoin is Emerging Again
Long-term liquidations of BTC also decreased significantly in the last 24 hours. This shows that investors are trying to abandon their positions, especially when Bitcoin is interacting with a rising resistance line. We saw selling pressure return above the $28,000 price level.
Source: TradingView
Bitcoin flirting with buying opportunities above its RSI and MFI also increases the likelihood of selling pressure pushing the price down. This explains why traders are trying to abandon their positions. The risk of outflows from fish addresses is also increasing. Addresses with over 1,000 BTC reached a peak on March 20 and have since significantly reduced their balances. This is a sign that fish are trying to withdraw their short-term gains.
