Key Insights
- •Bitcoin is making its most significant attempt to exit an 8-week short-term range.
- •Bitcoin shorts surged by $267 million as the price jumped above $95,000.
- •Tuesday's spot inflows reached their highest levels since October 12th, but whale activity indicates a bearish bias.
Bitcoin's price has been constrained below $95,000 for over six weeks. Weak demand had kept it near its lower range, but a surprise rally on Tuesday pushed it above $95,000 for the first time since mid-November.
The Bitcoin price climbed as high as $96,474 on Tuesday, driven by a 6% bullish move during the trading session. This bullish momentum represented its first substantial effort to break out of its bottom range, where it had been trading for more than two months.
This recent rally brought the Bitcoin price closest to the $100,000 level it has seen in some time. However, on-chain data indicated that many traders anticipated a price reversal once it approached the $95,000 mark.
Bitcoin Price Rally Triggers a Spike in Short Liquidations
Liquidation data revealed that a considerable number of derivatives traders had anticipated a reversal. Consequently, as the Bitcoin price surged above $95,000, approximately $270 million worth of short positions were liquidated on Tuesday.
This marked the largest daily short liquidation recorded since October 10th, which was previously the highest liquidation event in crypto history. In contrast, only $22 million in long positions were liquidated on Tuesday, heavily favoring the downside against short positions.
The significant liquidations underscored the expectation that Bitcoin would likely remain within its two-month bottom range for an extended period. The substantial short liquidations also highlighted a build-up of bullish demand.
Bitcoin ETF Inflow Fuels BTC Price Rally
Unsurprisingly, Bitcoin spot inflows on Tuesday neared $400 million, marking the highest daily spot inflows observed since October 12th. This figure represents the second-highest daily accumulation event since the October 10th crash.
While spot flows favored the bulls, a pertinent question this mid-week was whether the BTC price could finally ascend above $100,000 once more.
The Bitcoin uptick on Tuesday signified the return of bullish confidence. The answer to this question largely depends on the activity of large holders. The rally was also supported by a surge in spot Bitcoin ETF inflows, which totaled over $753 million.
The positive Bitcoin ETF flows initiated the week on an upward trend, reversing the streak of outflows from the previous week. While ETFs channeled funds back into the market, whale activity shifted its stance.
According to Coinglass, large order book data indicated that whales were taking profits and executing shorts over the past 24 hours. For context, whales sold Bitcoin valued at 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 that whales anticipate a limited rally. Furthermore, Bitcoin's apparent demand growth remained negative.
What’s Next?
This weak apparent demand growth signals that Bitcoin might struggle to find sustained follow-up demand. Moreover, these recent price movements were supported by rising open interest and increased volatility.
These findings could lead to further liquidations, particularly as market excitement builds. In other words, the current situation still points to uncertainty in short-term price movements, with whales selling while institutions accumulate.
Nevertheless, the Bitcoin price has just broken out of its short-term resistance, which is a significant development. Bitcoin appears to be building bullish momentum on larger timeframes, especially the 1-week chart, which could indicate it is entering a recovery phase.