Key Takeaways
Is Bitcoin on its way to a new all-time high?
Possibly. Cycle models show that BTC could reach between $143,000 and $146,000 if reaccumulation continues.
Why are traders shorting while Bitcoin supply continues to decline?
Despite heavy futures shortages, LTHs are piling up, pushing BTC out of exchanges with the potential for a squeeze.
Bitcoin [BTC] sends mixed signals.
Traders are betting against it, with open interest (OI) up 30% and funding rates deeply negative. But LTHs don’t sell.
Since January, BTC supply on exchanges and OTC counters has fallen from 4.5 million to 3.1 million. Despite new highs, people are still buying, and some analysts say Bitcoin could reach $143,000 to $146,000 this cycle.
Leverage increases as shorts flow in
Source: CryptoQuant
OI on Binance this past week jumped past more than 30%, making it one of the steepest climbs in recent months. At the same time, financing rates turned negative, indicating an increase in the number of short positions.
Source: CryptoQuant
Simply put, traders bet heavily on the market, expecting prices to fall. But usually, when funding becomes so bearish and leverage increases, it often gives way to a short squeeze.
This would force bearish traders to buy back in.
The supply is drying up
BTC is disappear from the exchanges and OTC counters at a rapid pace: supply has fallen from 4.5 million to just 3.1 million coins since January 2024.
Source: CryptoQuant
That’s a big shift.
Miners aren’t selling, and LTHs won’t budge even if prices reach new highs. Unlike previous cycles, there is no rush to take profits. Instead, BTC is taken into cold storage.
Where’s the top?
According to Joao Wedson, CEO of Alpharactal, Bitcoin’s current price action still fits within the long-term cycle structure.
If BTC is in a reaccumulation phase, Wedson expects the top of this cycle to be between $143,700 and $146,300, consistent with the historical performance loss in previous cycles.
Source: Alpharactal
However, if recent highs around $126,000 mark a distribution phase, the cycle top may already be in place. Still, Wedson thinks notes That,
“The data is not behaving as if we have reached the top…”
Time will soon tell which story plays out.