Key Insights
- Rising Coinbase premium index signals market shift for Bitcoin (BTC USD) price, alongside improving Binance liquidity.
- Whales hesitate to enter the market as Japanese government bonds dumping raises alarm on another Yen-induced liquidity drain.
- Bitcoin price registers a sharp bounce back after an initial dip earlier this week.
Bitcoin (BTC USD) price has been increasingly leaning in favor of the bulls lately. A refreshing change from the bearish sentiment that prevailed over the last few weeks, but this has investors wondering whether a deeper recovery is in sight.
Recent market data revealed some interesting changes that may offer insights into Bitcoin price potential in the coming weeks or months.
For starters, the Bitcoin Coinbase Premium index recently adopted a steep vertical, and has even switched back to positive.
The Coinbase premium index previously maintained an overall downtrend in November.
Moreover, it dipped into negative territory on multiple occasions between August and September.
The Bitcoin Coinbase premium index’s return to positive territory may signal the return of institutional investment.
This data also aligned with other liquidity metrics such as spot and perpetual contract volumes on Binance.
These data points highlighted improving liquidity conditions after the November crash. In other words, market conditions are aligning in favor of recovery.
However, the situation in the bond market suggests that the coast may not be clear for the bulls.
Bitcoin Whales Hesitate Despite Rising Sentiment
Although the Coinbase premium index signals the return of institutional interest, the prevailing demand remained weak.
This was evident in Bitcoin ETF inflows, which have continuously favored inflows since 25 November. However, daily inflows remained relatively low.
The weak institutional flows may suggest that investors adopted a cautiously optimistic approach to the latest bearish retreat.
Whale shared similar sentiments, judging by large orderbook flows since the start of December. Whale spot flows were negative in the last 3 days by at least $26 million.
However, the whales also hedged their positions with over $763 million in long positions within the derivatives market.
These demand dynamics offered insights into why Bitcoin (BTC USD) price recovery has been restricted.
Weak demand from whales previously led to capitulation, hence why some investors feel that the latest rally may still carry some capitulation risks.
Bitcoin (BTC USD) Recovery Targets $100,000 After Latest Bounce
Bitcoin bears attempted to take over the first week of December. However, it bounced back by over 10% from its lowest price point in the last 3 days.
The bullish Bitcoin (BTC USD) price action in the last 3 days aligned with accumulation as sentiment shifted away from extreme fear.
Moreover, the RSI approached its mid-level, while the MFI indicator confirmed that the liquidity was flowing back into the cryptocurrency.
If Bitcoin pushes past the 50% RSI level, then that will signify a robust demand wave. If it fails to push beyond the same level, then a retracement will likely ensue.
If Bitcoin (BTC USD) can secure enough momentum, then the next stop will be above $100,000.
Fibonacci retracement from its latest swing high in September to its November low, places the next swing high within the $103,500 to $108,900 price level.
Whether Bitcoin (BTC USD) price will maintain upside in the first week of December remains to be seen.
And also, it could be heavily dependent on how whales and institutional flows will perform in the second half of the week.
The market is expected to experience a volatility surge in the next few days ahead of the upcoming FOMC meeting. This is slated to take place about a week from now.