Highlights:
The Bitcoin sell-off has intensified, yet data indicates that spot buyers are increasing their allocation amounts.
Liquidation heatmap analysis suggests the sell-off could extend down to $107,000.
On Thursday, Bitcoin (BTC) dropped to a two-week low of $108,865. While various entities have shown interest in purchasing at this lower range this week, selling during the Asian trading session has eroded gains made during each rebound in the US session.
Over the past week, traders have actively bought intra-day lows, but liquidation heatmap data from Hyblock reveals a cluster of leveraged long positions that are vulnerable to absorption between $111,000 and $107,000.
Alongside the liquidation risks to the downside, activity in perpetual futures markets continues to significantly influence Bitcoin’s daily price movements, with heavy selling from institutional investors (holding between 1,000 to 10 million) outpacing the spot buying observed among smaller retail investors (holding between 100 to 1,000).
Even though Bitcoin nearly dipped below $110,000, a significant development today is the aggregate spot order book bid-ask ratio shifting back towards buyers. This metric indicates “the balance between the number of buy orders (bids) and sell orders (asks) in an order book,” ranging from -1 to 1, with zero suggesting an equal quantity of buy and sell orders present.
Hyblock reports,
“A bid/ask ratio above 0 suggests there are more buy orders than sell orders in the order book, indicating stronger demand for the asset at the current price level.”
Related: Bitcoin faces ‘imminent’ $110K retest as US dollar hits three-week high
When applying the metric to a 10% depth on only spot exchanges, it shows buyers beginning to enter as the price decreased from $111,200 to $110,553. Evidence of this buying is reflected in the anchored four-hour cumulative volume delta, with a noticeable increase in buy volume (indicated by yellow arrows).
While spot volumes are significantly lower than the trading activity observed in perpetual futures markets, the re-emergence of a bid-ask ratio favoring buyers is noteworthy, as this has not been seen since Sept. 5 to Sept. 7, just prior to BTC’s rise from $107,500 to its recent peak at $118,200.
This article does not offer investment advice or recommendations. Every investment and trading decision carries risk, and readers should conduct their own research before proceeding.
