Bitcoin prices fell on Tuesday as traders with a short-term risk appetite locked their profits.
The benchmark cryptocurrency fell as much as 4.56 percent to an intraday low of $ 25,833. However, attempts to extend the declining momentum failed due to comparatively stronger buying pressure near the $ 25,000 range. Since Christmas the level, which served as concrete support for the third time, aroused the expectation that it would serve as the ground for the next upward run.
Bitcoin is consolidating in a descending channel pattern. Source: BTCUSD on TradingView.com
Bitcoin consolidates inside a Descending Channel pattern. Source: BTCUSD on TradingView.com
Many analysts agreed that the BTC / USD exchange rate is now anticipating an increase towards USD 30,000. A pseudonymous day trader noted that the pair is trending within a descending triangle, adding that the current technical setup could see an upward breakout and hit at least $ 29,000.
Meanwhile, he also noted that a bearish reversal scenario would plunge the price towards $ 23,200.
Bitcoin Open Interest
The statements were released when Bitcoin futures listed on the Chicago Mercantile Exchange reported a record number of outstanding derivative contracts, also known as Open Interest (OI).
Data retrieved from Skew showed that the OI of the CME Bitcoin futures hit $ 2.6 billion, accompanied by a record breaking daily volume of $ 1.7 billion. This indicated stronger momentum, particularly among institutional traders who are relying on regulated exchanges like CME to get involved in the Bitcoin market.
CME Bitcoin Futures OI and volume report. Source: Skew
CME Bitcoin Futures OI and Volume report. Source: Skew
Meanwhile, the data analytics platform DataMish found that the majority of the total number of outstanding derivative contracts was long. Long / short interest in Bitcoin futures and options was 87.37 percent versus 12.63 percent short, which is due to the fact that most investors have an bullish bias on cryptocurrency.
DataMish also saw a decline in net hedged and unhedged short positions in Bitcoin, suggesting that even bears believe the Bitcoin price rally will continue to rise without encountering major levels of resistance.
Institutional Investment Rocketing
The lack of a strong bearish bias is due to the growing influx of institutional capital into the Bitcoin market. Data retrieved from ByBt.com shows that Grayscale Investments holds more than 607,000 BTC, valued at $ 16 billion.
Meanwhile, other mainstream companies are amassing their bitcoin reserves to protect themselves from fiat inflation caused by a depreciating US dollar. Recently, the Nasdaq-listed company Greenpro Capital announced that it would take out debts of 100 million US dollars to buy Bitcoin, and described the cryptocurrency as a “reliable future store of value”.
Grayscale investing bitcoin reserves. Source: Bybt.com
Grayscale Investments Bitcoin reserves. Source: Bybt.com
“The growth of the capital flowing into BTC is now in line with April 2017 of the last cycle,” said Willy Woo, an on-chain analyst. “The early bull phase is over, the main phase has begun. it came early. ”
Bitcoin was trading at $ 26,591 at the time of this writing.