In short
- The market lacks spot demand, as evidenced by the cumulative volume delta, and exhibits periodic bursts rather than a sustained upswing.
- The options and futures market shows defensive positioning and a large reduction in risk, with decreasing skewness, open interest and financing rates.
- Furthermore, the Bank of Japan’s rate hike this week could further destabilize the market as risk from traditional instruments is likely to trickle down to crypto assets.
Bitcoin’s upside remains limited by a tight wall of supply from underwater investors, leading to a tentative pre-holiday moment, according to a new analysis.
A lack of sustained demand on the spot market and defensive positioning of derivatives show that a fragile market is entering a Christmas period of low liquidity.
The top crypto started trading around $86,300 on Wednesday. According to CoinGecko data, the price rose almost 4.6% to break the $90,200 mark, but minutes later the entire bounce was wiped out and hopes for a Sinterklaas meeting.
The holidays usually bring a… low liquidity regimewhich further amplifies volatility and market movements. Bitcoin remains flat on the day, trading around $86,600.
Wednesday’s spike in buying pressure came from derivatives investors, as evidenced by a rise in open interest and a positive delta in perpetual cumulative volume, according to Velo data.
In other words, recent buying has been driven primarily by traders using leveraged derivatives, rather than spot buyers. However, the subsequent decline on the same day was mainly driven by spot sellers, as evidenced by the decline in the cumulative volume delta in the spot market.
Wednesday’s rejection and resulting decline reflect “the dense supply that has accumulated between $93,000 and $120,000,” according to a report by Glassnode on Wednesday.
The report notes that any upside is likely to “remain limited” as long as the price remains below the 0.75 quantile, at around $95,000, and fails to regain the short-term holder’s breakeven level of $101,500.
The real market average of $81,500, which is the average purchase price of Bitcoin held by active investors, has absorbed the selling pressure so far, preventing a deeper collapse. But the question on everyone’s mind is: for how long?
“We are unlikely to see a significant ‘rocket jump’ for Bitcoin before the end of 2025 given current bearish sentiment,” Ryan Yoon, senior analyst at Seoul-based Tiger Research, told reporters. Declutter. “However, if the upcoming CPI data is favorable, we could see some relief in the near term as the market reacts to a possible easing of inflationary pressures.”
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