Bitcoin's fall to $61,000 over the weekend is the result of market participants reducing exposure to the digital asset ahead of the halving scheduled for April 20, according to the latest CryptoQuant weekly report .
Analysts said traders closed their long positions to take profits, and now the volume of sell orders in perpetual futures markets dominates buy orders. This is evident in the buy-sell ratio, which has fallen below one. The ratio exceeds one when buy orders dominate sell orders.
Traders reduce their exposure to Bitcoin
As traders reduced their exposure to Bitcoin, total open interest fell from 250,000 BTC to around 220,000 BTC. Short-term holders (entities holding BTC for less than six months) sold their assets to realize high profit margins following the asset's recent rally to $71,000.
Funding rates were also affected, as they turned negative for the first time since January 2024. CryptoQuant said that negative funding rates indicate that traders are willing to pay to open and maintain short positions.
Additionally, the growth in demand for Bitcoin from whales (holders of 1,000 to 10,000 BTC) has slowed after the rapid pace seen last month. The monthly increase in the total balance of these large entities fell to 8% from 11% recorded in mid-March.
Likewise, growth in demand from permanent BTC holders (accumulation addresses) and exchange-traded funds (ETFs) in the United States weakened, with the former registering monthly records of 161,000 BTC, falling compared to the 204,000 BTC seen in previous months. ETFs have seen net outflows for three consecutive trading days, with Grayscale's GBTC outflows exceeding the funds' cumulative inflows.
Bitcoin still in a bull market
Regardless of the drop in demand growth and open interest, BTC is still in the bull market phase. Analysts at CryptoQuant said the recent sell-off was necessary to reset traders' unrealized profits, a move seen as a bottom signal in bull cycles. Bitcoin's value also moved closer to the trader-realized price of $58,000, which has served as support this season.
“From a long-term cyclical perspective, Bitcoin is still in a bull market phase. CryptoQuant's Bull-Bear Cycle Indicator is still in the BULL phase. However, this signaled that the bull market had entered an overheating phase when prices rose above $70,000,” the company said.
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