Previously, in an analysis by CryptoCrypto, the potential impact of Bitcoin retracing from its recent all-time high and the likelihood of long liquidations were discussed. Despite the overbought conditions, there was minimal sell pressure observed across the market, with Bitcoin holders showing resilience.
The market’s confidence remained robust post the recent peak, largely due to significant inflows into Bitcoin ETFs within the last 24 hours. These ETF flows have been a reliable indicator of market sentiment. As noted by Eric Balchunas from Bloomberg, Bitcoin ETFs accumulated a remarkable $1.4 billion, highlighting the strong market interest.
“HOOVER CITY: Bitcoin ETFs took in a record-smashing $1.4b yesterday (the Trump effect). $IBIT alone was +$1.1b. That’s +$6.7b in past mo and $25.5b YTD. All told they feasted on about 18k btc in one day (vs 450 mined) and are now 93% of the way to passing Satoshi’s 1.1mil btc.”
The influx of funds through ETFs could potentially drive Bitcoin to new highs. A recent analysis by cryptoQuant explored the possibility of a short squeeze scenario due to the combination of high Open Interest and negative funding rates.
Historically, negative funding rates have signaled a shift towards bearish sentiment in the derivatives market. Analysis of Coinglass’s BTC long/short ratio confirmed that short positions outweighed long positions in the last three days.
This surge in short positions was likely a response to traders’ expectations of the previous peak serving as a resistance level or triggering profit-taking leading to a market correction. Nevertheless, these shorts faced the risk of liquidation if the price surged upwards.
Concurrently, Bitcoin’s Open Interest began stabilizing after reaching a new all-time high, hitting $24.19 billion on November 8th.
Exchange Flows Indicate Sustained Demand Outrunning Sell Pressure
Recent exchange flow data depicted a notable decline, hinting at potential signs of bullish momentum exhaustion. Despite this, the outflow of BTC from exchanges slightly exceeded the inflow, indicating ongoing bullish demand.
On November 9th, exchange outflows of 6,648 BTC contrasted with inflows of 5,806 BTC, signaling a prevailing bullish sentiment favoring a potential price increase.
Considering the data discussed, there remains a visible bullish momentum that hinders bearish dominance. The continued demand from Bitcoin ETFs alongside these factors might explain the existing optimism in the market. However, sustainability remains uncertain.
Bitcoin’s recent price movement reflects struggles from the bulls in pursuing higher levels, potentially suggesting a cooling demand that could pave the way for a bearish correction when sell pressure intensifies.