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Cryptocurrency News Articles
Bitcoin Rebounds with Reduced Leverage, Traders Still Cautious
May 06, 2024 at 02:00 pm
As Bitcoin (BTC) prices stabilized around $64,000, traders reduced their leverage, indicating decreased risk and a healthier derivatives market. However, despite the price appreciation, holders remained unprofitable, with the MVRV ratio suggesting they are waiting for a higher price point to sell. Furthermore, the declining Long/Short difference highlights a decreasing number of long-term holders and a potential increase in "paper hands" who may sell during market volatility.
Bitcoin Price Recovery Accompanied by Reduced Leverage and Skeptical Traders
In a market development reflecting increased stability, Bitcoin (BTC) prices have regained the $64,000 threshold, holding steady around this level over the past 24 hours. This price stabilization coincides with positive signals from the derivatives market, indicating a potential reduction in leverage.
Derivative Market Indicators Point to Decreased Leverage
A significant reset in Funding Rates has been observed after the recent price drop, suggesting a decrease in market leverage. Open Interest as a percentage of market cap has also fallen below 2%, the first time since February, further indicating reduced leverage. Lower leverage is generally viewed as a sign of decreased risk in the market, which bodes well for BTC's long-term health.
Traders Display Skepticism
Despite the price recovery, data from Coinglass reveals a higher percentage of short positions against BTC compared to long positions, indicating some skepticism among traders. This suggests that while the market may be showing signs of stabilization, traders remain cautious.
Holders Remain Unprofitable
At press time, BTC traded at $64,232.57, representing a 1.37% price increase over the past 24 hours. However, trading volume has declined by 11.18% during the same period. Despite the recent price surge, holders of BTC remain unprofitable, according to data from Santiment. The MVRV ratio, which measures the profitability of holders, has fallen, indicating that most holders are still awaiting a green return on their investments.
Declining Long/Short Difference Poses Challenge
A potential challenge to BTC's rally is the declining Long/Short difference. This metric shows that the number of long-term holders is decreasing and being outnumbered by short-term holders. Short-term holders, known for their tendency to sell holdings during market volatility, could present a potential threat to the price movement of BTC.
Short-Term Holders' Impact on Price Movement
The perspective and conviction of short-term holders will play a crucial role in determining the future price direction of BTC. Should they exhibit a "paper hands" mentality and sell their holdings amidst market fluctuations, it could hinder BTC's continued rally.
Conclusion
The recent stability in BTC prices, coupled with reduced leverage and skeptical traders, presents a complex market dynamic. While long-term holders may be hesitant to sell at a loss, the declining Long/Short difference and potential for short-term selling raise uncertainties regarding the sustainability of BTC's rally.
Disclaimer:info@kdj.com
The information provided is not trading advice. kdj.com does not assume any responsibility for any investments made based on the information provided in this article. Cryptocurrencies are highly volatile and it is highly recommended that you invest with caution after thorough research!
If you believe that the content used on this website infringes your copyright, please contact us immediately (info@kdj.com) and we will delete it promptly.
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