In a previous analysis, CryptoCrypto delved into the potential risk of long liquidations in case Bitcoin retraced from its most recent all-time high. Despite being in an overbought territory, the selling pressure has remained subdued, and as of the latest data, Bitcoin holders have maintained their position firmly.
The resilience in the face of potential sell pressure can be attributed to the prevailing strong market confidence following the recent market peak. Particularly noteworthy was the significant influx of funds into Bitcoin ETFs in the last 24 hours, which has bolstered this confidence. Traditionally, ETF flows have served as a reliable indicator of market sentiment, as highlighted by the recent record-breaking inflows as reported by Eric Balchunas on Twitter.
“The surge in Bitcoin ETFs inflows reached a staggering $1.4 billion yesterday (termed as the Trump effect), with $IBIT alone seeing an increase of $1.1 billion. This amounts to a total of $6.7 billion over the past month and $25.5 billion year-to-date. The cumulative inflow acquired approximately 18,000 BTC in a single day (compared to 450 mined), approaching 93% of Satoshi’s 1.1 million BTC target.”
These significant inflows from ETFs have the potential to propel Bitcoin to new highs. A recent analysis by cryptoQuant explored the likelihood of a short squeeze scenario given the high Open Interest juxtaposed with negative funding rates.
Historically, negative funding rates have been an indicator of a shift towards bearish sentiment in the derivatives market segment. This transition was further substantiated by Coinglass’s data on the BTC long/short ratio, illustrating a dominance of short positions over longs in the past three days.
The spike in short positions can be linked to derivative traders anticipating the previous peak to act as a formidable resistance level, triggering potential profit-taking or a short-term correction. Nevertheless, these shorts are at risk of liquidation if the price continues to surge upwards.
Concurrently, Bitcoin’s Open Interest seems to have stabilized after reaching a new all-time high, peaking at $24.19 billion on November 8th.
Exchange Flows Indicating Persistent Demand Over Sell Pressure
Recent exchange flow data pointed towards a noticeable decline, hinting at potential signs of bullish fatigue. Despite this observation, the outflow of BTC from exchanges marginally exceeded the inflows, implying ongoing demand favoring bullish trends.
On November 9th, 6,648 BTC were recorded in exchange outflows versus 5,806 BTC in inflows, indicating the prevailing demand was in favor of bulls, suggesting a potential upward movement in price.
Considering the data presented, it appears that there is still sufficient bullish momentum to stave off bearish pressures, supported by the demand from Bitcoin ETFs, which may justify the prevailing optimism. However, this does not guarantee a sustained situation in the future.
Recent price action on Bitcoin indicates a struggle by bulls to maintain upward momentum, potentially signaling a downturn in demand and opening the possibility for a bearish retracement once selling pressure gains momentum.