Bitcoin’s Price Stagnates Ahead of Independence Day Weekend — Crypto Market Daily
Bitcoin Struggles with Bearish Sentiment, Dashing Alt Season Hopes: Market Watch Weekly
Last week saw Bitcoin (BTC) fall from around $10,000 to as low as $8,700, a decline triggered by a UTXO from Feb. 2009 (more than 11 years ago) being spent on-chain. After two unsuccessful attempts to reclaim $9,200 during the weekend, BTC is currently trading around $8,800 as per the OKEx BTC Index Price.
Bitcoin’s price action resulted in a loss of 9.92 percent over the week, and created a bearish engulfing pattern on the weekly chart, indicating sellers have overtaken the buyers. While Ethereum (ETH), Bitcoin SV (BSV) and Litecoin (LTC) saw much smaller losses with -2.77 percent, -2.85 percent and -3.4 percent respectively, Bitcoin Cash (BCH) posted a weekly return of -6.83 percent.
Alt season may not be around the corner
Since Ethereum showed its bullish momentum versus Bitcoin, small altcoins with historically strong ties to Ethereum also rallied. According to data from MVIS, the Small-Cap Index outperformed all other indexes in May, posting a 12.29 percent return so far.
Moreover, with the BTC market dominance index falling from 67 percent to 65 percent after the halving, as per CoinGecko, and OmiseGo (OMG) pumping in midweek, there appeared hope for alt season. However, OMG, which had surged due to its launch on Coinbase Pro, declined nearly 30 percent between its midweek high and today’s trading session. Moving forward, if Bitcoin cannot bounce back and stay above $9,000, it will be very challenging for altcoins to follow a sustained uptrend.
Bitcoin On-chain activity dropped last week
As of 2 a.m. UTC on May 25, the Bitcoin network’s hashrate stood at about 91.18 EH/s, which was 14.05 EH/s lower than last week’s average level as per Oklink data. Apart from revenue reduction resulting from the halving, the shutdown of large-scale mining machines due to flood season in the southwest region of China can be attributed for this decline in hashrate.
Meanwhile, the total number of active addresses on the network between May 18 and May 24 was also down by 1.84 percent from last week, while the total number of transactions dropped 10.39 percent in the same period.
Lowest Long/Short Ratio in May
Bitcoin showed signs of weakness over the last week and bearish sentiments prevailed, as we noted in our Futures Friday segment. Looking at OKEx trading data, the Long/Short Ratio has been running below 0.85 for the first time this month, validating the bearish scenario.
Open Interest (OI), however, soared on Sunday afternoon, jumping from 550 million contracts to above 620 million. Moreover, the Quarterly Future’s premium is back in negative territory, indicating that market participants are no longer optimistic about mid-term price movements. The negative premium has widened by more than -$30 at the time of writing.
The Long/Short Ratio shows the ratio of the total number of users opening long positions versus opening short positions. The ratio is compiled from all futures and perpetual swaps. The long/short side of a user is determined by their net position in BTC.
In the derivatives market, whenever there’s a long position opened, there must be a short position opened as well to balance it. The total number of long positions must be equal to the total number of short positions. When the ratio is low, it indicates that more people are holding shorts.
BTC may have lost the rising channel
While futures trading data indicators have shown bearish signs, BTC’s price reflected the negative sentiment by falling below the rising channel shown in the chart below. This is also the first time BTC dropped below the 30-day moving average, which had remained an important support since April 2.
If BTC cannot recover above the $8,900 to $9,000 area in the short term, we may see another downward move to test the $8,550 support. Meanwhile, OKEx BTC Monthly Future will expire on May 29, and we may see increased volatility moving towards expiry.
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