Key insights:
Purchases from retail and large-scale traders have helped temper the sell-off in BTC prices, yet bears still have a strong opportunity to leverage long liquidations down to $106,000.
The volumes in spot and perpetual futures are lacking vigor, hindering any sustainable trend reversal, as sellers persist in offloading into price recoveries.
Bitcoin (BTC) bulls are striving to maintain the $112,000 level just a day after the crypto market experienced its largest long position liquidation of the year. On Monday, $1.62 billion in long positions were wiped out, and as the market seeks to bounce back, analysts from Glassnode caution that the Bitcoin bull market may be transitioning into its “late-cycle phase.”
Although BTC briefly surpassed $112,000, aggregate cumulative volume delta data from Hyblock indicates that sellers are still in control of the price movement, raising the risk of a deeper pullback towards the range lows.
Examining the data, the True Retail Longs and Shorts Account (Binance) metric shows that both retail traders and whales have been increasing their leveraged long positions since Monday, as BTC’s price declined. The 1 million to 10 million cohort has anchored CVD, and the 1,000 to 10,000 four-hour anchored CVD illustrates a struggle between buyers and sellers.
When compared to the 10% aggregate orderbook depth bid-ask ratio, there is evidence of selling pressure easing as BTC’s price seeks to stabilize within the $113,000 to $111,000 range.
Related: Bitcoin faces resistance at $113K as Fed’s Bowman suggests quicker rate cuts
While buyers appear to be interested in BTC’s current range, bulls are not yet secure, as liquidation heatmaps indicate prices traversing through underlying bid liquidity, with a significant concentration at $107,000.
Taking a broader perspective of current Bitcoin market dynamics (not including macro factors, spot BTC ETFs, and US equities), most of the daily price action is driven by the perpetual futures market.
Open interest has shifted between the $46 billion to $53 billion range from late July 22 up until this week. Without recoveries from the range lows at $112,000 (Aug. 3) and $107,000 (Sept. 1), buying volume in the spot markets and aggressive long leverage in the perps market are noticeably lacking.
This situation, where long positions hesitate to escalate volume in both spot and futures markets, increases the likelihood that sellers might attempt to drive prices into leveraged longs facing liquidation between $110,000 and $106,000.
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.
