Key points:
Bitcoin’s sell-off has deepened, yet data reveals that spot buyers are increasing their allocation sizes.
Liquidation heatmap data indicates that the sell-off may extend down to $107,000.
Bitcoin (BTC) dipped to a two-week low of $108,865 on Thursday. Although various entities are showing interest in purchasing at the lower range, selling during the Asian trading session has undermined the gains achieved in each US session rebound.
Over the past week, traders have been buying intra-day lows, but liquidation heatmap data from Hyblock shows a cluster of leveraged long positions at risk of liquidation from $111,000 to $107,000.
Alongside the liquidation risks, activity in perpetual futures markets continues to influence Bitcoin’s daily price movements, with significant selling from institutional investor-sized cohorts (1,000 to 10 million) outweighing the spot purchases observed among retail investors (100 to 1,000) orders.
Despite Bitcoin almost dropping below $110,000, a key development today is the aggregate spot orderbook bid-ask ratio shifting back towards buyers. This metric evaluates “the relationship between the number of buy orders (bids) and sell orders (asks) in an order book,” where the ratio ranges from -1 to 1, with zero indicating an equal number of buy and sell orders.
According to Hyblock,
“A bid/ask ratio greater than 0 indicates more buy orders than sell orders in the order book, suggesting higher demand for the asset at the current price level.”
Related: Bitcoin faces ‘imminent’ $110K retest as US dollar hits three-week high
Configuring the metric to 10% depth at only spot exchanges reveals that buyers are beginning to enter as the price fell from $111,200 to $110,553. Evidence of this buying is reflected in the anchored 4-hour cumulative volume delta, showing a surge in buy volume (yellow arrows).
While the spot volumes still lag behind the trading activity found in perpetual futures markets, the resurgence of a bid-ask ratio favoring bulls marks a first since it was last noted between September 5 and September 7, before BTC surged from $107,500 to its recent peak at $118,200.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
