Once again, Bitfinex Alpha made its report on the current situation of the crypto market. On this occasion, the analysis is aimed especially at Bitcoin. The crypto asset has been posting losses for the first time in two weeksTherefore, according to various sources, the impact of this behavior on the ecosystem will be analyzed.
For the first time in a little over two weeks, Bitcoin had On-chain losses specifically on Thursday, February 9. This occurred when the ratio of all Bitcoin, those that move both profit and loss fell below one. The Bitcoin Realized Profit/Loss Ratio indicator fell as low as 0.9189 as Bitcoin hit a new roughly three-week low below $22,000. Which means then a drop of 5%.
Prior to the 5% loss in value, the cryptocurrency had already recorded another 5% retracement from monthly highs nearing $24,000 although this did not affect the Realized Profit/Loss ratio. Which then means that maybe The first fall was the effect left by the taking of profits from those who bought at the beginning of the year and before and during the rise of Bitcoin.
In past editions, Bitfinex Alpha, had addressed the issue of how profit-taking and the long-term trend in RPnL could mean short-term reversals. However, on this occasion, the fall of the RPnL on February 9 was not only due to profit taking.
“The combination of this data with the liquidation data in the derivatives markets suggests that a greater part of the selling pressure was due to the liquidation of long leveraged positions.”, explained Bitfinex Alpha.
Major futures exchanges signaled that Bitcoin long selloffs hit their highest value in over three months.s with USD 64.6 million on Thursday, February 9. Causing then, the drop in the price of Bitcoin to occur, reaching a position of said value at USD 21,500.
“This is typical of BTC price action, wiping out long open interest and causing ‘weak hand’ and ‘late’ long selloffs after a prolonged rally,” Bitfinex Alpha said.
The ecosystem is currently awaiting how Bitcoin will respond to the support levels of USD 21,500 and USD 20,200 after registering this movement. Although the concerns of the Bitcoin bulls are not entirely allayed as selling pressure from short-term buyers who bought below $20,000 remains. However, the long path that Bitcoin has traveled has shown that this movement is characterized by prices that vary little for a certain time.
Although the setbacks are hogging all the attention of the ecosystem, It cannot be overlooked that Bitcoin net weighted derivatives net funding rates continue to bullish.
“Profit-taking of this magnitude, even by long-term holders, raises suspicions about market sentiment and confidence in this open-ended annual rally.”, Bitfinex Alpha detailed in its report.
But it really is not data that should alter the Bitcoin bulls, according to Coinglass, despite the fall on Thursday, February 09, the Bitcoin leveraged financing rates have not shown any type of change, which keeps them with signs positives. Funding rates in this positive situation suggest that “Speculators are bullish and long traders are financing shorts.”
Another source, Deribit, showed data indicating that prior to Thursday call odds reflected 71.1% of total open interest for Bitcoin options and 77.5% for Ether. In the medium term, the Bitcoin put/call ratio remains bullish.
According to the data found, investors should be prepared to receive a possible fall in the short term, specifically in the next week. This follows from the delta deviation of 25% which reached its lowest point this year on February 10th.
The deviation of the 25% delta in a one-week range reached -5.2 on Friday, February 10, which has been the lowest level it has reached since December 28, 2022. The delta edges of the 25 % at around 30,60,90 and 180 days have been targeting one-month lows and even one-month lows.
Except for the 180 day, all have been below zero in recent days. Which suggests that investors are prepared to receive a bigger drop in the price of Bitcoin in the short term.
“The 25% Delta Options Deviation” It is a substitute variable that is responsible for measuring the degree to which the trading desks charge more or less with the intention of protecting the rise or fall through the purchase and sale options offered to investors.
A 25% delta option deviation above 0 means these desks are charging more for equivalent calls than puts. Which then leads to a greater demand for call options than for put options and therefore an upward trend begins to be tested.
At the moment, the delta inclination of 25% at 180 days continues to mark positive. Which means that the medium-term vision of Bitcoin continues to be “moderately positive.” When it comes to funding rates and the “delta bias” of options, they continue to serve as fundamental indicators of the state of the market.
If there were to be a drop below USD 20,000 that would bring about an effect “a new stop for short-term speculators” which were long at the $21,500 support zone at the time.
“However, it is to be expected that buyers will look forward to grabbing a fair amount of Bitcoin as it approaches its Realized Price, which currently sits at $19,840,” the Bitfinex Alpha report concluded.
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