Trusted editorial content reviewed by leading industry experts and experienced editors. Ad Disclosure
The Bitcoin market has been in a state of uncertainty in recent weeks following its unusually negative performance in October. While overall market sentiment suggests that the top of the bull cycle could also be near, the most recent on-chain data suggests that the leading cryptocurrency may simply be going through a reset. According to a blockchain company's report, the recent lull appears to be setting the stage for the coin's next big move.
BTC is just not in a cycle exhaustion phase: XWIN
In the most recent Quicktake post on the CryptoQuant platform, XWIN Research Japan revealed that Bitcoin's current situation looks less like the top of a cycle and more like a restructuring period. The DeFi firm expects market fundamentals to be realigned after eliminating excessive leverage in recent weeks.
XWIN Research supported the claim of reduced leverage, highlighting that open interest within the Bitcoin futures market has declined significantly because the end of October. This drop in open interest signals short-term traders exiting their leveraged positions.
The blockchain company noted that past cycle peaks often saw a rise in leveraged transactions, even at high price levels. However, this euphoric market position constructing is just not currently the case for Bitcoin, meaning a cycle top is unlikely to be seen.
Source: CryptoQuant
Additionally, XWIN Research Japan said that Bitcoin price currently lacks momentum and structural support. The blockchain company cited declining demand from US institutional investors as one in every of the explanations for the dearth of momentum – because the negative Coinbase Premium Index shows.
As of this writing, Bitcoin's value is around $101,930, reflecting no significant movement within the last 24 hours. However, on a weekly basis, the flagship cryptocurrency is deep within the red, having suffered an 8% price decline within the last seven days.
The Bitcoin market shows each strengths and weaknesses
Despite weaker institutional demand for BTC, XWIN Research pointed to some positive signs that might contribute to the cryptocurrency's eventual recovery. For example, the DeFi company revealed that Bitcoin foreign exchange reserves remain at their lowest levels in several years, meaning there continues to be a limited supply available.
Additionally, stablecoin liquidity is regularly flowing back into the market; This means purchasing power can be returning and investors could be waiting for the correct time. However, XWIN Research noted that despite the market's apparent resilience, current sentiment points to a range-bound move within the near term.
The price of BTC within the each day time-frame | Source: BTCUSDT chart on TradingView
Featured image from iStock, chart from TradingView
Editorial process At Bitcoinist, the main target is on providing thoroughly researched, accurate, and unbiased content. We maintain strict sourcing standards and each page is fastidiously reviewed by our team of top technology experts and experienced editors. This process ensures the integrity, relevance and value of our content to our readers.
