Key Insights:
Purchasing activity from both retail and large traders has helped mitigate the BTC price decline, but bears still have a solid opportunity to leverage long liquidations down to $106,000.
Spot and perpetual futures volumes lack intensity, hindering a sustainable trend reversal, while sellers continue to capitalize on price recoveries.
Bitcoin (BTC) bulls are striving to maintain the $112,000 threshold just a day after the crypto market experienced its largest single-day long position liquidation this year. On Monday, $1.62 billion in long positions were liquidated, and as the market seeks to recover, analysts at Glassnode caution that the Bitcoin bull market may be entering its “late-cycle phase.”
Even though BTC briefly remained above $112,000, aggregate cumulative volume delta data from Hyblock indicates that sellers persist in dominating price action, increasing the likelihood of a deeper sell-off nearing the lower range.
Behind the scenes, the True Retail Longs and Shorts Account (Binance) metric shows retail traders and whales boosting their leverage long positions since Monday amidst BTC’s price decline. The cohorts of 1 million to 10 million and 1,000 to 10,000 in four-hour anchored CVD illustrate a struggle between buyers and sellers.
When compared against the bid-ask ratio set at 10% of the aggregate order book depth, it becomes clear that selling pressure is easing as BTC attempts to stabilize within the $113,000 to $111,000 range.
Related: Bitcoin faces resistance at $113K as Fed’s Bowman suggests quicker rate cuts
Although buyers are showing interest within BTC’s current range, bulls are not yet out of danger. Liquidation heatmaps reveal that the price is consuming the underlying bid liquidity, with a significant cluster around $107,000.
Looking at the broader Bitcoin-specific market dynamics (excluding macro factors, spot BTC ETFs, and US equities), daily price movements have largely been influenced by the perpetual futures market.
Open interest has varied within the $46 billion to $53 billion range from late July 22 to this week; and unless there are recoveries from range lows at $112,000 (August 3) and $107,000 (September 1), both spot market buy volume and aggressive long leveraging in the futures market remain largely absent.
This scenario, characterized by longs being cautious to increase volume in both spot and futures markets, raises the chances for sellers to potentially push the price towards leveraged longs at risk of liquidation from $110,000 to $106,000.
This article does not constitute investment advice or recommendations. Every investment and trading decision carries risk, and readers should perform their own research prior to making any decisions.
