Bitcoin [BTC] rebounded back above $90k after the drop to $88k on Monday. This was helped by the end of quantitative tightening and the expectations of a 25 bps rate cut after next week’s FOMC meeting.
The dovish Federal Reserve policy could make risk-on assets more attractive to investors. This would see more capital flows to the crypto industry, and especially Bitcoin. Whether these flows will be enough to drive a rally to new highs remains to be seen.
Do on-chain metrics agree with a local market bottom?
Source: Axel Adler
The Bitcoin bull signal was activated, according to crypto analyst Axel Adler. Specifically, the Bitcoin Futures Market Power reached 56.5, at the time of writing, generating a bull signal.
This metric combines relative Open Interest, funding rate, and taker imbalance to generate a composite indicator of Bitcoin derivative pressure. A break of the 60-level would be a bullish confirmation, and more upward momentum can be expected.
On the other hand, a drop below 50 would signal a transition to bearishness and pose a risk of correction.
Source: CryptoQuant
The Coinbase Premium Index turned positive on 28 November and has remained positive for the most part since.
It showed a hike in spot demand from U.S investors, especially since the metric measures the BTC-USD and USDT pair percent difference on Coinbase and Binance.
Source: CryptoQuant
The Coin Days Destroyed metric tracks the sentiment and behavior of long-term holders. Computed using UTXO destroyed, spikes on the metric usually indicate movement from longer-term holders and can signal profit-taking.
Over the last ten days, the metric has been relatively quiet. It is something traders can keep an eye on to mark a local top.
A recent AMBCrypto report noted that a quarter of all Bitcoin supply slipped into unrealized loss. This 25% of the supply that is underwater is held by top buyers from recent months. A structural shift would need Bitcoin to climb past $106.2k.
Finals Thoughts
- Bitcoin’s rebound past the $90k-level was accompanied by spot demand from U.S. investors and a bull signal in the BTC Futures market.
- At the same time, a significant chunk of BTC holders were underwater after buying it in recent months.
Source: https://ambcrypto.com/bitcoin-rebounds-past-90k-after-futures-market-flashes-fresh-bull-signal/