Journalist
Posted:
- Bitcoin loses downside flexibility after retesting the June support level.
- Market sentiment is turning in favor of the bulls, leading to speculation that the bottom has been reached.
What if Bitcoin [BTC] is currently in a cycle bottom? This idea has been floating around lately and could be one of the reasons why the bulls are gaining strength again lately.
Is your portfolio green? Check out the Bitcoin profit calculator
Bitcoin regained its bullish momentum after a dismal start this week. On Monday September 11, the price fell by more than 2%, but at the time of writing it followed an increase of 3.87% in the past 24 hours. This bullish performance has the market pondering whether this could be a sign that the market has bottomed out.
Source: TradingView
LunarCrush conducted a survey on X to determine the level of bullish and bearish sentiment. About 56.4% of correspondents expected further negative impacts, while 43.6% expected the market to bottom out.
The crypto market has reached its bottom.
— LunarCrush Social Trends (@LunarCrush) September 12, 2023
Why the bottom could be inside or closed
Bitcoin’s September 11 crash was notable for two main reasons. The price previously struggled to move to a lower price level and once it did, a huge bullish surge ensued. This suggested that more traders are confident that lower price levels are more attractive.
Furthermore, the recent dip caused the price to be retested at the June lows (previous support level). Hence the accumulation at the USD 24,900 support range. The ratio of longs versus shorts also improved in favor of the bulls.
This measure on mint glass revealed that the ratio increased from 0.81 on September 8 to 1.02 on September 12. The same measure showed that shorts fell slightly over the same period, while longs grew slightly higher.
Source: Coinglass
A look at the whale and institutional side revealed that outflows have dominated over the past four weeks. For example, the Purpose Bitcoin ETF holding metric in particular showed consistent downside.
Meanwhile, outflows from top addresses (those holding more than 1,000 BTC and more than 10,000 BTC) have recently fallen to a monthly low. However, addresses with at least 1,000 started accumulating on September 11, despite the negative aspects.
Source: Glassnode
We also examined the current demand in the derivatives market. At the time of writing, open interest had increased slightly, while the estimated leverage ratio decreased slightly.
This could indicate that some traders could be adding to their short positions, especially with sentiment favoring the bulls. On the other hand, the market is still cautious, hence the low number of leveraged long positions.
Source: CryptoQuant
How much are 1,10,100 BTCs worth today?
In summary, the above findings indicate that the market is currently leaning towards bullish expectations. The recent lows so far have shown strong consolidation and low selling pressure below the $25,000 price range. However, these findings do not rule out that there will be further negative consequences under current support.