Bitcoin’s price has showcased notable volatility in the past 24 hours, becoming a battleground for bulls and bears. Bulls aggressively scooped up assets during a dip to $27K, sending the price toward the crucial $28,000 mark. However, the surge was short-lived as sellers quickly exploited the rally, offloading substantial quantities of BTC and inducing a rejection. On-chain data unveils that the $28K level was not only targeted by short-term holders but also witnessed long-term investors liquidating their Bitcoin holdings, intensifying the selling pressure.
Bitcoin’s Open Interest Surges Despite Massive Liquidation
Over the last day, BTC price has undergone a revival in buying interest among traders, effectively probing the support near $27K. As a result, Bitcoin saw a significant upswing but was thwarted in its attempt to ascend above $28,000 due to rising sell pressure, dragging it back below the $27,500 mark and highlighting the ongoing tussle among traders. Importantly, traders are now initiating additional futures contracts, as indicated by the rising Open Interest chart.
Data from Coinglass indicates that Bitcoin experienced a short liquidation exceeding $4 million following its surge above $28K. However, the momentum was short-lived as sentiment was quickly reversed due to selling in profit. The volume of long-liquidation surpassed $7 million after Bitcoin failed to sustain trading above $28,000. Consequently, Bitcoin’s price once again dipped below $27,500 and is currently experiencing an upward push, resulting in another short-liquidation of $1.5 million.
Interestingly, Coinglass data unveils that the Open Interest (OI) metric has experienced a significant rise over the past 12 hours, soaring from $11.4 billion to $11.6 billion, reflecting a $200 million augmentation.
An escalation in open interest can signal potent bullish or bearish sentiment among traders, depending upon the trajectory of price movement. Concurrent rises in prices and open interest often denote bullish sentiment. Furthermore, a spike in open interest, particularly when paired with rising trading volumes, may bring increased volatility, implying that fresh capital is entering the market, possibly triggering price swings in an upward direction.
LTHs Are Taking The Upward Opportunity
Data from Glassnode reveals a concerning pattern in the on-chain movement of Bitcoin. According to data, the net position in BTC Hodlers just reached a 1-month low of 51,845. The Hodler Net Position Change, a metric that tracks the behavior of long-term Bitcoin investors, or “Hodlers,” has historically been a reliable indicator of the cryptocurrency’s market sentiment and potential price movements.
A decline in the Hodler net position change typically indicates that long-term holders are selling their assets, which can increase selling pressure in the market. This increased selling pressure can lead to price fluctuations, potentially initiating a downtrend if the selling momentum is sustained.
The exit of long-term holders might pave the way for short-term speculators to dominate the market, potentially increasing volatility. Other investors might reevaluate their strategies and potentially adjust their positions in anticipation of a bear market.
Furthermore, Glassnode data reveals a striking surge in Bitcoin’s NVT signal (network value to transaction ratio), skyrocketing to a remarkable 1,737.098 – a level unseen in the previous five years. Despite Bitcoin’s current value hovering at less than half of its 2022 peak, the network volume has nosedived to a degree that even a $27,000 valuation may be skirting the edge of sustainability.
An increase in Bitcoin NVT implies that its network valuation is surpassing its transaction value, potentially signaling either robust growth and investor zeal or a fragile price bubble tumbling on the edge of collapse.
