The Bitcoin market has been in a state of uncertainty over the past few weeks, following its uncharacteristically negative performance in October. While general market sentiment suggests that the end of the bull cycle may be near, the latest on-chain data suggests that the flagship cryptocurrency may just be undergoing a reset. According to a blockchain company report, the recent slowdown appears to be paving the way for the next major move for the coin.
BTC is not in cycle exhaustion phase: XWIN
In the latest Quicktake post on the CryptoQuant platform, XWIN Research Japan open Bitcoin’s current situation looks less like the end of the cycle and more like a restructuring phase. The DeFi firm believes market fundamentals are being reset after excess leverage was eliminated in recent weeks.
In support of the call for lower leverage, XWIN Research highlighted that open interest in the Bitcoin futures market has declined significantly since late October. This decrease in open interest signals short-term traders to exit their leveraged positions.
The blockchain company noted that at the peak of the last cycle, leveraged trades often increased even at high price levels. However, this cheerful accumulation of market positions is not currently the case for Bitcoin, meaning the top of the cycle is likely not what we are seeing.
Source: CryptoQuant
Furthermore, XWIN Research Japan said that Bitcoin price currently lacks momentum and structural support. The blockchain company cited lower demand from US institutional investors – as highlighted by the negative Coinbase Premium Index – as one of the factors behind the lack of momentum.
As of this writing, Bitcoin is worth around $101,930, reflecting the lack of significant movement over the past 24 hours. The major cryptocurrency is in a deep red zone on the weekly time frame, having suffered an 8% price decline in the past seven days.
The Bitcoin market shows strengths and weaknesses
Despite weak institutional demand for Bitcoin, XWIN Research highlighted some positive signs that could contribute to the cryptocurrency’s eventual rebound. For example, the DeFi company revealed that Bitcoin exchange reserves are still at multi-year lows, meaning a limited supply is still available.
In addition, stablecoin liquidity is gradually flowing into the market; This means that purchasing power is also returning, and investors may be waiting for the right time. However, XWIN Research noted that despite the apparent market resilience, current sentiment points to a range-bound move in the short term.
The price of BTC on the daily timeframe | Source: BTCUSDT chart on TradingView
Featured image from iStock, chart from TradingView
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The post Don’t Panic — Bitcoin Market Is Only In A Restructuring Phase: Blockchain Firm first appeared on Investorempires.com.
