- Bitcoin’s market equilibrium is somewhat unsettled due to excess long/short positions
- Geopolitical tensions influence the price of Bitcoin
The larger cryptocurrency market is experiencing a decline, with Bitcoin (BTC) leading this downward trend. Although it reached a higher high of $66,000 in late September, it was valued at just over $60,000 at the time of writing.
According to data from Hyblock Capital, Bitcoin’s market equilibrium is somewhat unsettled. As a result, BTC could be poised for another correction, especially in the early stages of the last quarter of 2024.
This extreme investor behavior provides insight into potential market turning points. When there are excessive long or short positions, it means that the market equilibrium is disturbed.
Source: CryptoQuant
Understanding market equilibrium is critical because excessive long or short positions often indicate potential corrections or trend reversals.
Many traders expected a bullish trend, but the current dynamics are driving sentiment in a different direction.
Short-term delivery of Bitcoin holders
If short-term investors reduce their supply by 80,000 BTC, this could pave the way for a new bullish trend. This cut would help stabilize the market, making it easier for Bitcoin to regain its position.
In recent weeks, there has been an influx of supply floods on the exchanges, which has contributed to downward pressure on the price of Bitcoin. At the time of writing, Bitcoin activity was trading below the 365-day SMA, reinforcing the bearish outlook.
Source: CryptoQuant
As supply increases while demand decreases, the price of BTC will likely continue to decline. This means that a correction may be imminent.
Interested in active cryptocurrencies
At the same time, the number of active cryptocurrencies has stagnated since the end of 2021. This lack of growth could be a sign of reduced interest in launching new projects.
Several factors may contribute to this trend, including market weakness and regulatory pressure. This situation is a further indication that Bitcoin could be headed for a correction on the charts soon.
Source: Alpharactal
Global tensions affect prices
Current geopolitical tensions, especially the conflict between Iran and Israel, are also affecting cryptocurrency prices. In fact, historical data shows that during real-world conflicts, Bitcoin prices often fall initially followed by a recovery.
For example, in October 2023, Bitcoin fell 5% in the first four days. However, over the next nine days the price recovered by 12%.
Source: Santiment
Similarly, during the Ukraine-Russia conflict in February 2022, BTC fell 10% on the first day but rose 27% in the following six days.
Given these patterns, it appears that Bitcoin is undergoing a correction ahead of a possible rally in the final quarter. However, can the undamaged whales help BTC stay above the $60,000 level now?
BTC’s whale activity
Despite the current market volatility, both new and old whales remain unfazed. The moves in the futures market are part of a broader strategy, one in which real market changes occur through spot trading and over-the-counter (OTC) markets, such as Ki Young Ju noted on X.
The flow of Bitcoin into custodial wallets means permanent holders are increasing their stakes. By doing so, they support a long-term bullish outlook for Bitcoin.
Source: CryptoQuant
In fact, data from CryptoQuant shows that older whales have achieved minimal returns, while newer whales are aggressively accumulating Bitcoin.
This will potentially help BTC stay above the USD 60,000 level. However, it is worth noting that this bias is subject to the unpredictable nature of crypto markets.