Key points:
The sell-off of Bitcoin has deepened, yet data indicates that spot buyers are increasing their allocation.
Liquidation heatmap data implies that the sell-off could reach down to $107,000.
On Thursday, Bitcoin (BTC) dropped to a 2-week low of $108,865. Despite various entities showing interest in purchasing at the lower range, selling during the Asian trading session has diminished the gains made during each US session rebound.
Over the past week, traders have entered to buy at intra-day lows. However, liquidation heatmap data from Hyblock reveals a cluster of leveraged long positions at risk of being absorbed from $111,000 to $107,000.
In addition to the liquidation risks, the perpetual futures markets continue to impact Bitcoin’s daily price movements. Heavy selling from institutional-sized investors (1,000 to 10 million) continues to outweigh the spot buying from retail investor-sized orders (100 to 1,000).
Despite Bitcoin’s near drop below $110,000, a significant development today is the aggregate spot orderbook bid-ask ratio shifting back toward buyers. This metric gauges “the relationship between the volume of buy orders (bids) and sell orders (asks) in an order book,” ranging from -1 to 1, with zero indicating an equal number of buy and sell orders.
Hyblock states,
“A bid/ask ratio above 0 signifies more buy orders than sell orders, potentially indicating stronger demand for the asset at the current price level.”
Related: Bitcoin is poised for an ‘imminent’ $110K retest as the US dollar approaches a three-week high
When adjusted to 10% depth at only spot exchanges, buyer activity has started to emerge as the price dipped to $110,553 from $111,200. This buying is corroborated by the anchored 4-hour cumulative volume delta, showing a spike in buy volume (indicated by yellow arrows).
While spot volumes are relatively small compared to the trading activity in perpetual futures, the resurgence of a bid-ask ratio favoring buyers marks a first since it was last observed from September 5 to September 7, right before BTC surged from $107,500 to its recent peak at $118,200.
This article does not offer investment advice or recommendations. All investing and trading involves risks, and readers should perform their own research before making decisions.
