Bitcoin consolidates as buyers wait for clarity – Will BTC’s losses deepen?
Over the past month, Bitcoin's exchange netflow has been negative, but things have changed over the past four days.
Bitcoin [BTC] has receded from the $72k level it reached on Wednesday, the 25th of March. It had fallen back to the local lows at $65.6k by Friday, the 27th of March, but has witnessed a minor price bounce over the weekend.
In a post on X, crypto intelligence platform Santiment pointed out that retail FUD was growing. Social media engagement was heavily bearish, and the use of fear words such as “rejection” or “crash” was ramping up.
Yet, as their data showed, it is during the times of retail bloodbath that buying opportunities have come about. These have not seen a sustained uptrend after the higher timeframe trend shift in October, but they do point toward a bounce.
Another crypto market intelligence platform, Alphractal, showed that the long/short ratio was rising in recent days. Despite the pullback from $76k over the past ten days, the rising long positions showed traders were willing to take elevated amounts of risk to catch the local bottom.
This could be dangerous for short-term bulls. Increased willingness to take leveraged long positions means that long liquidations build up below the local lows.
This makes it more attractive for BTC to go on another long squeeze toward $64k or lower.
Buying power sits sidelined, waiting for clarity
Crypto analyst GugaOnChain used the falling exchange stablecoin ratio to show that there was a high amount of stablecoins sitting on exchanges compared to their Bitcoin reserves.
The recent price drop saw the exchange stablecoin ratio to USD fall to the February lows. This indicates BTC is structurally cheap, and there is sufficient buying power to capture the dip, the analyst concluded.
As the price of BTC increases, the coin’s reserve value increases, pushing the exchange stablecoin ratio USD higher. To understand the implications better, exchange netflow is also needed.
Over the past month, the exchange netflow has been negative, showing steady accumulation. This backs up the idea that buying pressure was there despite the volatility of the past two weeks.
Another phase of negative netflows would mean holders were buying the dip and would be a sign of confidence. With global markets tottering, Bitcoin investors might want to wait for more clarity before buying.
Final Summary
- Retail sentiment was extremely bearish, but speculative traders were willing to assume extra risk and go long in these conditions.
- The buying power was high, according to the stablecoin reserve ratio, but netflows were indecisive over the past four days.
