Is Bitcoin in for a short Squeeze? 4 bullish trends to look out for

Bitcoin is present into its 12th week of the prevailing drawdown since the all-time-high, and derivatives traders are betting connected much downwards movements by the premiere cryptocurrency. Meanwhile, on-chain request models suggest a much bullish undertone is successful play, according to on-chain analysts Glassnode.

“As a percent of the Bitcoin marketplace cap, unfastened involvement successful perpetual swaps is hovering astir 1.3%, which is historically high, and often arsenic precursor to a deleveraging event,” Glassnodes writes successful this week’s newsletter.

Short bias successful perpetual swap markets

At the aforesaid time, backing rates person traded antagonistic for overmuch of January, Which whitethorn bespeak a abbreviated bias successful perpetual swap markets. A akin antagonistic inclination tin beryllium seen successful options markets, with a multi-month precocious put/call ratio of 59%; an denotation that traders person shifted towards buying downside insurance.

“With this observable displacement from agelong into abbreviated bias crossed derivatives markets, the dominance of futures liquidations has started to creep towards the abbreviated side. With precocious negativity, elevated leverage, and an wide abbreviated bias, a tenable statement could beryllium made for a imaginable counter-trend abbreviated compression successful the near-term,” the newsletter reads.

Looking astatine the request broadside of the market, the fig of non-zero Bitcoin wallet balances is connected the rise. The existent inclination of non-zero wallet counts appears to beryllium mostly unaffected by the past 3 months of depressed prices, with wallet number hitting a caller all-time-high of 40.16 cardinal addresses.

Retail wallets unfazed by this correction

Though bitcoin marketplace terms has been connected a diminution for the past weeks, retail size wallets, wallets holding little than 1 BTC, look unfazed by this correction, with proviso held successful these wallets continuing to climb. Given Bitcoin’s past arsenic a grassroots phenomena, this speaks to a increasing people of “sat stackers” who stay passim each marketplace conditions.

Another inclination connected the affirmative broadside is that funds are moving towards illiquid wallets. Over 0.27% of the supply, astir 51,000 BTC, was moved from a liquid to an illiquid state, according to Glassnode.

“This week, we person seen nett outflows of a reasonably precocious magnitude, with rates betwixt 45,000 and 59,000 BTC per month. This has confluence with the summation successful illiquid supply, indicating that immoderate information of the speech withdrawn coins whitethorn person moved to colder storage.”

Reserves held connected exchanges astatine multi-year lows

As a effect of however funds are moving, the full reserves held connected exchanges person decreased to multi-year lows, reaching 13.27% of the circulating supply. This is precise antithetic from however funds moved during the May-July 2021 drawdown erstwhile implicit 164,000 BTC, oregon 0.84% of the circulating supply, was flowing into exchanges, alongside a diminution successful Illiquid proviso adjacent to 1.5% of the circulating supply.

“Despite equivalent standard drawdowns, the trends successful speech reserves and coin liquidity are trending successful other directions. The existent situation has a markedly much bullish undertone of proviso absorption, and acold less coins being spent and sold successful fear,” the newsletter reads.

Settlement level worth continues to grow

Adding to the supra bullish signs, during some of the May-July and the existent drawdowns, colony volumes declined importantly from the foregoing peaks. However, the level worth has continued to grow, adjacent during bearish trends. This speaks to a much sustained, and adjacent increasing inferior of Bitcoin.

Also, these colony volumes determination distant from retail-sized transactions (less than $100,000), towards high-net-worth and institutional-sized values (over $1 million).

“Transactions implicit $10 cardinal successful size present predominate 45% of settled volume, whilst sizes implicit $1 cardinal predominate implicit 70% connected an entity-adjusted basis. Large size transactions person sustained this elevated dominance passim 2021, and person really peaked higher implicit the people of this correction.”

Previous instances wherever colony volumes person been this precocious comparative to the marketplace headdress person preceded beardown bullish impulses successful carnivore markets, oregon astatine macro marketplace bottoms specified arsenic December 2018, and March 2020.