Key Insights:
- Bitcoin makes its most serious attempt yet at exiting its 8-week short-term range.
- Bitcoin shorts surge to $267 million as price jumped above $95,000.
- Tuesday spot inflows pushed to the highest levels since 12 October, but whale activity reveals bearish bias.
Bitcoin price has been restricted below $95,000 for more than 6 weeks. Weak demand ensured that it remained near its bottom range, but a surprise rally on Tuesday broke above the $95,000 for the first time since mid-November.
The Bitcoin price surged as high as $96,474 on Tuesday, courtesy of a 6% bullish move during the trading session. This bullish momentum marked its first major attempt at breaking out of its bottom range, where it has been stuck for over 2 months.
This latest rally marks the closest that Bitcoin price has come to the $100,000 price level. However, on-chain data revealed that many traders expected the price to revert to the downside once it came close to the $95,000 price level.
Bitcoin Price Rally Triggers a Spike in Short Liquidations
Liquidation data revealed that quite a number of derivatives traders anticipated a reversal. As a result, the Bitcoin price pushed above $95,000. Roughly $270 million worth of short positions were liquidated on Tuesday.
This was the largest daily short liquidation recorded since 10 October, which was the highest ever liquidation event for crypto. In contrast, there were only $22 million longs liquidated on Tuesday, tilting the balance heavily against shorts.
The heavy liquidations highlighted expectations that Bitcoin would likely hover within its 2-month bottom range for a while longer. The massive short liquidations also highlighted the bullish demand build-up.
Bitcoin ETF Inflow Fuels BTC Price Rally
Unsurprisingly, Bitcoin spot inflows almost clocked $400 million on Tuesday. This was the highest daily spot inflows observed since 12 October. In other words, this was the second-highest daily accumulation event that occurred since the October 10 crash.
While the spot flows favored the bulls, one of the most pertinent questions this mid-week was whether BTC price could finally be headed above $100,000 once more.
The Bitcoin uptick on Tuesday signified the return of bullish confidence. The answer to the question mostly depends on the large holder activity. The rally was also backed by a spike in spot Bitcoin ETF inflows, which amounted to over $753 million.
The positive Bitcoin ETF flows kicked off the week in the green, pivoting from last week’s streak of outflows. While ETFs pumped funds back into the market, whale activity shifted guard.
According to Coinglass, large order book data revealed that whales were taking profits and executing shorts in the last 24 hours. For context, whales sold Bitcoin worth over $78 million across Binance, Coinbase, and OKX in the spot market.
Whales also executed over $588 million worth of shorts in the last 24 hours. This suggests the whales expect a limited rally. Moreover, Bitcoin apparent demand growth was still negative.
What’s Next?
According to CryptoQuant, this weak apparent demand growth signaled that Bitcoin might struggle to find follow-up demand. Moreover, these latest moves were underpinned by rising open interest and higher volatility.
These findings may pave the way for more liquidations, especially now that market excitement is building up. In other words, the current situation still underscores short-term price movement uncertainty as whales sell, but institutions accumulate.
Nevertheless, Bitcoin price just broke out of its short-term resistance, and that has to count for something. Bitcoin appears to be building up bullish momentum in larger timeframes, especially the 1-week chart, which could signal that it is entering a recovery phase.