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In his most recent tweet, the Glassnode co-founder described five factors that might be holding Bitcoin back in current market conditions. A few of them might be crucial for the recovery of the first cryptocurrency.
Bullish momentum shattered
A few days ago, Bitcoin was deliberately testing the local resistance level of $25,000, but because of a combination of factors, the price action reversed in the opposite direction with the price of the first cryptocurrency reaching back to June's level.
#BTC structure update:
— 𝗡𝗲𝗴𝗲𝗻𝘁𝗿𝗼𝗽𝗶𝗰 (@Negentropic_) August 22, 2022
- Low liquidity environment
- #Bitcoin Risk Signal crossed over to the high-risk zone
- Demand for downside protection
- #ETH options open interest dominating $BTC
- Altcoins losing steam
Check out the complete analysis here 👇https://t.co/WcfcRTDCif pic.twitter.com/Ebe7UFaJDd
The lack of liquidity is one of the main factors highlighted by the Glassnode co-founders. With the increase of volatility, the buying power was insufficient to withstand the weakness that transitioned from equity markets.
In addition to low liquidity, the Bitcoin Risk Signal has also crossed over to the high-risk zone, providing even more pressure on the market as fears spread across equity and digital assets markets.
Ethereum is beating BTC
Although open interest in certain Ethereum derivatives being greater than on BTC does not speak against Bitcoin directly, it shows a lack of interest in the digital gold among investors.
Demand for downside protection can be considered another factor caused by the unfriendly environment in risk-on markets, as traders would prefer safer options than cryptocurrencies that are surviving through the rate hike cycle and losing around 70% of their values from the ATH.
The lack of volatility on the market, anemic altcoin performance and the aforementioned reasons are the main factors that pushed Bitcoin away from the reversal rally that seemed so close when the first cryptocurrency was actively testing the $25,000 threshold.
Tomiwabold Olajide
Godfrey Benjamin
