Bitcoin [BTC] recovered above $90,000 after falling to $88,000 on Monday. This was helped by the end of quantitative tightening and the expectation of an interest rate cut of 25 basis points after next week’s FOMC meeting.
The Federal Reserve’s accommodative policy could make risky investments more attractive to investors. This would lead to more capital flows into the crypto industry, and especially into Bitcoin. Whether these flows will be enough to drive a rally to new highs remains to be seen.
Do the on-chain metrics correspond to a bottom in the local market?
According to crypto analyst, the Bitcoin bull signal was triggered Axel Adler. Specifically, Bitcoin Futures Market Power reached 56.5 at the time of writing, which is a bull signal.
This measure combines relative open interest, funding rate, and taker imbalance to generate a composite indicator of Bitcoin derivatives pressure. A break of the 60 level would be bullish confirmation, and more upside momentum can be expected.
On the other hand, a drop below 50 would indicate a transition to bearishness and pose a risk of correction.
The Coinbase Premium Index turned positive on November 28 and has remained largely positive since then.
It showed an increase in spot demand from US investors, especially as the metric measures the percentage difference between BTC-USD and USDT on Coinbase and Binance.
The Coin Days Destroyed metric tracks the sentiment and behavior of long-term holders. Calculated using destroyed UTXO, spikes in the metric usually indicate longer-term holder movement and can indicate profit-taking.
The metric has been relatively quiet over the past ten days. Marking a local top is something traders can look out for.
A recent AMBCrypto report noted that a quarter of all Bitcoin supply fell into unrealized losses. This 25% of the supply that is underwater is in the hands of top buyers from the past few months. For a structural shift, Bitcoin would need to rise past $106.2k.
Final thoughts
- Bitcoin’s recovery past the $90,000 level was accompanied by spot demand from US investors and a bull signal in the BTC Futures market.
- At the same time, a significant portion of BTC holders found themselves underwater after purchasing it in recent months.