Over the past few days, the wave of liquidations across the cryptocurrency market has shaken investor confidence, leaving many traders on edge. With strengthening bearish pressure, many BTC holders are distributing their coins.
Bitcoin’s long-term holders (LTHs), typically known for extended grip on their coins, have begun selling, adding further pressure to an already cautious market. What does this mean for the coin in the short term?
The Coin Days Destroyed (CDD) of Bitcoin being deposited onto exchanges has reached its highest point in 30 days.
According to CryptoQuant, this currently sits at 1.79 million, soaring by over 850% since the beginning of April. This surge signals that coins held for long periods are now being transferred to exchanges, a classic precursor to potential sell-offs.
BTC’s Exchange Inflow CDD tracks the movement of older coins into exchanges. It is calculated by multiplying the amount of BTC moved by the number of days those coins have been held without being spent.
When it spikes, it means that LTHs are moving their coins to exchanges, possibly to sell. This trend is noteworthy because this group of investors has “strong hands.” They rarely sell unless there are concerning market conditions. Therefore, when they do, it suggests that their confidence is weakening and hints at a further price drop.
The sell-side momentum is also reflected in the derivatives market. BTC’s taker buy-sell ratio is currently below one, indicating that sell orders outweigh buy orders on futures and perpetual contracts.
This suggests that the coin’s derivatives traders are positioning themselves for further downside, amplifying the current bearish sentiment.
The market has attempted a modest recovery in the past few hours, with the total crypto market cap adding $48 billion over the last day. This uptick in activity has driven BTC’s price up by 4% in the past 24 hours.
However, the coin’s plummeting Chaikin Money Flow (CMF) is flashing a warning sign, forming a bearish divergence. At press time, the CMF has dropped below the zero line to -0.15 and continues to trend downward.
A bearish divergence emerges when an asset’s price rises while its CMF declines. This signals that buying pressure is weakening beneath the surface despite the price rally. If this continues, BTC could shed recent gains to trade at $74,389.
However, if the coin witnesses a resurgence in new demand, it could maintain its rally and climb toward $80,776.
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