After approaching $80,000, Bitcoin [BTC] has succumbed to the selling pressure. At the time of writing, BTC was trading at $75,520.59, having dropped 2.24% in the past 24 hours.
This clearly painted a scenario where BTC would not be able to break past the USD 80,000 resistance level. Needless to say, this price movement created a sense of caution among investors, which was very well reflected in the Futures data.
Bitcoin’s negative financing rate
Starting with the funding rate, the CoinGlass 4-hour chart on Bitcoin OI weighted funding rate to the price of BTC reflected that short traders had the upper hand.
The multiple red bars in April indicate bearish pressure, with the market betting heavily on more downturns. However, the Bitcoin ETF market saw an increase in inflows of approximately $2.43 billion in April, indicating that institutions largely absorbed the selling pressure.
Volatility highlights the risk of BTC traders
Notably, the CoinGlass 4-hour Bitcoin chart on the Long/Short ratio showed a mix of green and red peaks.
However, the ratio clearly changed from mainly red peaks in mid-April to a mix of green and red peaks towards the end of the month.
But the continued bearish momentum suggests traders are trying to catch a falling knife. Simply put, while this implies a buy-the-dip strategy, traders are preparing for more liquidations if the price continues to fall.
Spot versus derivative divergence
Finally, trading volume declined, according to CryptoQuant’s Spot vs. Derivative divergence on BTC trading volume, although Bitcoin’s price rose to almost $79K in mid-April, indicating weak momentum.
Clearly, leveraged traders had more control over price movements in late April as spot buying was extremely limited. As leverage overshadowed strong real buying demand, the rally to $79,000 briefly proved vulnerable.
Community reactions add to the bearish narrative
Moreover, a crypto analyst noted that the cryptocurrency community was wary, citing a $79,300 price realized by STH. His analysis found that many recent buyers had already incurred losses, which could put pressure on them to sell once prices rebound.
Echoing similar sentiments, another analyst added:
Overall, this indicates that Bitcoin is currently in a difficult phase.
Final summary
- Bitcoin’s price action, along with Futures data, painted a very bearish picture of the leading cryptocurrency.
- The crypto community, which has particular faith in Bitcoin, also echoed bearish sentiments.