Bitcoin (BTC) in a Consolidation Phase
Bitcoin (BTC) is currently in a consolidation phase, with concerns about its price declining further. According to the latest edition of the Bitfinex Alpha report, BTC is hovering around the $37,000 price range. Signs of diminishing momentum and positive funding rates on futures contracts are causing uncertainty in the market. These positive funding rates on futures contracts are historically associated with market declines. Additionally, there is potential for selling pressure from short-term holders realizing profits.
After four consecutive weeks of positive price movements, BTC recently recorded its first negative weekly close. The leading digital asset made a second attempt to surge past the $38,000 mark, but this rise was short-lived due to trading activities in the futures and spot markets. The Cumulative Volume Delta (CVD) metric for the futures market was negative as BTC’s price rose, indicating heavy profit-taking by market participants. This was confirmed by an 8.7% decrease in open interest, a clear sign that traders were locking in profits. The spot market also witnessed a “wall of limit sell orders.”
Tightening in BTC Supply
Interestingly, major altcoins have outperformed BTC, rallying as the leading digital asset sees a concentration of supply among various investor cohorts. On-chain analysis has shown a significant tightening in BTC’s supply as the fourth halving event, expected to occur in April 2024, approaches.
“Currently, the short-term holder age band has inflated, corresponding with a 120 percent year-to-date increase in BTC’s price. However, the current cycle shows a lower proportion of short-term holdings compared to past cycles, indicative of the current concentration of supply in the hands of long-term holders,” Bitfinex said.
The available supply, a measure that tells the amount of BTC circulating and accessible for trading, and supply storage, which represents the amount of BTC held by long-term investors, show that long-term holders are accumulating BTC at a rate greater than the pace at which new BTC is produced. The supply storage rate exceeds the new BTC issuance by over 200%, indicating unprecedented levels in history.
Source: Bitfinex Alpha report
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About the author - J-S Tremblay
I've been involved in the cryptocurrency world since 2016 and trading since 2019. I started Moon and Lambo in 2021. I'm passionate about crypto and love to share my knowledge. I hate bankers and I hope that cryptocurrency will change the financial world for the better. View full profile...
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