Bitcoin closed in red for the last 3 days. This came after a 3-week rally pushed Bitcoin to $ 46,520 for a while. However, this sudden bearish direction is what worries some investors.
That brings us to the question: Was this sudden change in trend the first sign of a bearish move or just a false reaction to the rally?
Bitcoin turns red
Over the past 3 days, Bitcoin has lost approximately 4.02% of its price, taking it under $ 46k for $ 1,000. Its latest bull run, which appreciated the price by 60% from the $ 30k range, put many investors in a position that could have been avoided. However, due to the panic and fear that accompanied the aforementioned price drop, investors had to sell their holdings.
This led to some significant sales in the market, as more than 30,000 Bitcoins ended up in the wallets of exchanges again. This $ 1.4 billion sales spree was the biggest single-day sale seen since November 2020.
However, this is not the end of this bull market.
King’s coin in bear claws?
Definitely not. Simply put, Bitcoin is not going to experience a major drop like it did in May. While there are several reasons behind this, the first is the price action itself. The 4% drop came after a single-day increase of 7.6%. Therefore, this was a correction and not a drop. Second, the price had started to recover somewhat again and will soon return to its levels.
Third, long-term daily active directions are currently at the same level as in April, when BTC was approaching its all-time high. This is one of the biggest indicators of a northbound breakout and not a downtrend.
Even OI Futures and OI Options are both in a 3 month high, indicating strong values in the derivatives market. Also, at the time of writing, the sale had also come to an end.
Now, according to the Bid-Ask spread that analyzes the number of buy and sell contracts in the market, it is clear that buying has priority over selling. Observed across multiple exchanges, buy demands appeared to exceed sell orders by 7000 BTC ($ 325 million).
Finally, the relationship between the market value and the realized value, a metric that shows whether the asset is of fair value or not (the position above 1 shows a strong value), placed Bitcoin at 2.25.
In conclusion, Bitcoin will not find itself in the claws of bears anytime soon. Corrections are healthy and at best that is what one should expect.
This is a machine translation of our English version.
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