Bitcoin Price Action and Market Sentiment
Bitcoin (BTC USD) price action has been favoring the bears since the second week of October. Its decline since then has triggered concern that the bull market might be over. However, a recent observation may indicate a contrary outcome.
What The Bitcoin Net Unrealized Profit Indicator Suggests
The Bitcoin Net Unrealized Profit indicator (NUP) suggests that the bearish wave might be bottoming out. The NUP indicator recently dipped as low as 0.47.
The indicator (orange colored) confirmed declining profitability among BTC holders. Moreover, Bitcoin (BTC USD) price bounced back at or near the same NUP level multiple times in the past. This could indicate that Bitcoin price may be ready for another bullish bounce. Meanwhile, Bitcoin’s net unrealized loss (green colored) has also been rising since October. This indicates that buyers who acquired the cryptocurrency over the last few weeks were experiencing more losses as prices extended their decline. However, it was worth noting that the net unrealized losses were significantly lower compared to the levels observed in April. Perhaps one of the reasons for this was the lower demand observed during the recent decline.
Factors Impacting Bitcoin (BTC USD) Price Right Now
Analysts believe that macro influences have recently been suppressing market sentiment over the last few weeks. Bitcoin (BTC USD) price has been impacted by these factors. The US government shutdown, in particular, was linked to the recent risk-off sentiment in the stock and crypto markets. Recent reports revealed that the U.S government shutdown might be headed for a conclusion. The House of Representatives has reportedly voted in favor of reopening the government.
The end of the government shutdown could potentially be the signal that triggers a sentiment shift in the markets. That may already be happening, judging by the latest Bitcoin ETF flow data. Bitcoin ETF flows have maintained overall negative daily flows since October 29. They have so far experienced only 3 days of positive flows since then, and the last one was on Tuesday. According to Farside, Bitcoin ETF inflows pushed over 524 million on November 11. The last time Bitcoin experienced such high levels of daily inflows was in the first week of October. This latest spike in Bitcoin ETF inflows could indicate that ETFs were loading up on more coins. This may signal a sentiment shift in favor of the bulls. However, an actual bullish outcome will depend on whether more demand follows through in the coming days.
Whales were still bearish despite the potential sentiment shift. CoinGlass data revealed that whales sold over $38 million BTC in the spot market across the top exchanges in the last 24 hours at press time. The derivatives segment registered about $132 million worth of net short positions during the same period. Nonetheless, Bitcoin still sucked in about $56 million worth of net spot liquidity across the market. Consequently, the Bitcoin price pushed above $104,800 at the time of observation.
Market Outlook and Potential Risks
In summary, Bitcoin (BTC USD) price has been gradually building up momentum in the last few days. And while some capitulation risk remained, the rising number of bullish signals may highlight potential changes in the market. While these observations highlighted the possibility of a broader recovery, the actual market sentiment was still in extreme fear. The government shutdown situation still requires further confirmation, and weak whale activity may underscore Bitcoin downside risks.