The only expected outcome of bitcoin trend flipping!

    Bitcoin is closed in red color for last 3 days. This comes after a 3-week long rally that briefly pushed Bitcoin to $46,520. However, it is this sudden bearish direction that worries some investors.

    This brings us to the question – was this sudden change in trend the first sign of bearish movement or just a false reaction to the rally?

    Bitcoin goes red

    Over the past 3 days, bitcoin has lost almost 4.02% of its price, dragging it from $1,000 to below $46k. Its latest bull run saw a price appreciation of 60% from the $30k range, putting a lot of investors in a position that could have been avoided. However, due to panic and fear coupled with the fall in the above prices, investors had to sell their stake.

    This led to some significant selling in the market as more than 30,000 bitcoins were returned to the wallets of the exchanges. The $1.4 billion sales spree was the highest single-day sales witnessed since November 2020.

    King coin in bear claws?

    Bitcoin will not experience any major declines like it did in May. While there are many reasons behind this, the first is price behavior. The 4% drop came after a one-day gain of 7.6%. Thus, it was an improvement and not a decline. Secondly, the price was beginning to recover somewhat and will soon return to its level.

    Third, long-term daily active addresses are currently at the same level as they were back in April when BTC was hitting its all-time high. This is one of the biggest indicators of a northward breakout, not a downtrend.

    Further both Futures OI and Options OI are at 3-month high, indicating strong prices in the derivatives market. Additionally, at the time of writing, the sale had also ended.

    Now, as per the Bid-Ask Spread, which analyzes the volume of buy and sell contracts in the market, it is clear that the preference is being given to buy over sell. Seen across multiple exchanges, the buy demand exceeded the sell order by 7000 BTC ($325 million).

    Finally, the market cap-to-real price ratio, a metric indicating whether the asset has fair value (a position above 1 showing a strong value), placed bitcoin at 2.25.

    In the end, bitcoin won’t be moving into bear paws anytime soon. Improvements are healthy and at most, this is what one should expect.


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