Will Selling Pressure Continue in Bitcoin? Current On-Chain Commentaries!

• On Monday morning, Bitcoin is oscillating just above $26,000, leaving behind the slight gains seen over the weekend. The leading cryptocurrency has gained nearly 0.10% in the past 24 hours.
• According to analysts, a leverage purge in the derivatives market cleared over $2.5 billion worth of open positions in a matter of hours. Since then, option markets have seen sharp adjustments in volatility premiums.
• As indicated by one analyst, Bitcoin’s recent drop formed a potential double-top formation that, according to analysts, could open up Bitcoin to another drop. Losing $25,000 could shift the focus to the $20,000 support zone.

Bitcoin faced a tough selling wave last week: Has this selling wave ended? What should investors focus on this week?

Has the Selling Wave in Bitcoin Ended?

On Monday morning, Bitcoin is oscillating just above $26,000, leaving behind the slight gains seen over the weekend. The leading cryptocurrency has gained nearly 0.10% in the past 24 hours and experienced an 11% loss last week.

Market dynamics could shift in favor of the bulls with a fresh injection of volatility – the Grayscale ETF court decision is expected on Tuesday – but Glassnode suggests that the selling pressure that drove BTC below $25,000 might not have entirely dissipated.

This is what analysts at Glassnode, an on-chain and financial data provider, have explained as to what triggered the BTC price collapse:

“Bitcoin bulls unexpectedly sent BTC below $25,000 with the largest selling pressure of 2023. A leveraged flush in futures markets might be a possible catalyst, but a larger concern could be held in unrealized losses by Short Term Holders that are not yet realized at 88.3%.”

According to analysts, the leverage purge in the derivatives market cleared over $2.5 billion worth of open positions in a matter of hours. Since then, the option markets have seen sharp adjustments in volatility premiums, but open positions have remained remarkably stable. Notably, spot markets appear to be heavily top-heavy, with a significant number of Short Term Holders who have unrealized losses.

According to the weekly on-chain report published by Glassnode on Monday, the platform’s market experts shared the following analysis:

“The sell-off also pushed prices below the Short Term Investor cost basis, a on-chain pricing model historically supportive during strong bull trends. This, combined with the realized price and Long Term Holder cost basis trading slightly below ($20.3k) sees the market position itself slightly psychologically unstable.”

As indicated by one analyst, Bitcoin’s recent drop formed a potential double-top formation that, according to analysts, could open up Bitcoin to another drop. Losing $25,000 could shift the focus to the $20,000 support zone. On the other hand, it’s reported that BTC’s daily RSI has reached its most oversold level since 2020 during the Covid-19 crash.

A Crucial Week

This perspective, combined with broader market sensitivity, could provide a new downward driving force. This week is crucial for stocks.

Especially, investor attention might turn to the Federal Reserve’s Jackson Hole symposium on Friday. Fed Chairman Jerome Powell’s speech will be a significant focal point considering macro factors like interest rates and inflation outlook.