Bitcoin (BTC) price experienced a moderate correction on March 27, dropping to $68,430 after failing to surpass the $71,000 mark. Data from Bitcoin derivatives data shows a decline in bullish sentiment among professional traders in the past week, suggesting that the $69,000 level may not hold.
The inflows of Bitcoin spot ETFs will play a crucial role in determining BTC’s price. Despite the rally from $63,800 to $70,000 in the five days leading up to March 27, only $151 million in leveraged short positions were closed in the BTC futures markets. This indicates that bears remained cautious, even after last week’s significant $888 million net withdrawal from U.S. Bitcoin spot exchange-traded funds (ETFs).
On a positive note, Bitcoin has shown resilience by recovering from a 17.6% drop from $73,757 on March 14 to $60,795 on March 20 without causing panic among spot ETF investors. However, some market observers argue that the primary driver behind BTC reaching a new high before the April Bitcoin halving was the unexpectedly high inflows into spot ETFs. This highlights the importance of monitoring such trends for bulls.
In a positive development for Bitcoin enthusiasts, there has been a reversal in spot ETF flows this week, with a total of $418 million in net inflows recorded on March 26. Importantly, this increase in inflows was not due to reduced outflows from Grayscale’s GBTC, indicating genuine institutional demand even as Bitcoin’s price remained just 4% below its peak. However, this does not guarantee professional traders that $69,000 will serve as a support level.
Analysts can analyze aggregated positions across spot, perpetual, and quarterly futures contracts to determine whether whales and arbitrage desks are adopting a bullish or bearish stance. On Binance, the long-to-short ratio among professional traders was 1.50 on March 22, favoring long positions. This figure has slightly decreased to 1.42 currently. On OKX, the sentiment was much more bullish on March 22, with a long-to-short ratio of 3.22. However, this sentiment has diminished, with the ratio currently at 1.49 in favor of longs. This indicates a notable reduction in optimism among top traders, despite the 9.5% price increase during the period, suggesting that other factors may be dampening bullish sentiment.
Bitcoin’s price is also being impacted by global economic concerns and mixed market signals. Some analysts argue that the global economic downturn is affecting Bitcoin’s performance, especially after the S&P 500 index failed to maintain its all-time high on March 21. The uncertainty surrounding the U.S. Federal Reserve’s interest rate decisions for 2024 is causing investors to lose confidence. Rate cuts are generally seen as positive for risk-on assets like Bitcoin. However, the expectations of fixed-income markets reflect only an 8% chance of a rate cut at the Federal Reserve’s May 1 meeting.
Furthermore, analysts caution that a Fed rate cut may signal troubles rather than prosperity. Concerns have been raised about the lack of earnings growth posing the greatest risk to the stock market. There are also worries about the overemphasis on artificial intelligence, which has been a significant driver of the stock market’s recent gains.
The decrease in the preference for leveraged long positions among Bitcoin’s top traders does not necessarily mean that investors should be alarmed or that Bitcoin will trade below $69,000. It likely reflects broader economic recession concerns and external pressures, such as the U.S. Justice Department’s charges against KuCoin exchange on March 26 and the European Parliament’s committee discussions on limiting cryptocurrency payments from self-hosted wallets.
This article does not provide investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research before making a decision.