Price Action

  • The Crypto Market saw two rallies at the beginning and end of the weekend

  • Bitcoin led these rallies due to a fresh inflow of USD

    • BTC jumped 11% on Friday to $41.7k
    • Proceeded to trade in a tight channel over the weekend
    • Jumped again by 2.5% Sunday evening to reach $42.8k

  • Unique price action YTD as Bitcoin was uncorrelated to the equity market

On-Chain Analysis

$87.1M Worth of Short Positions Liquidated on February 4th

  • Sudden 11% increase in BTC caused the liquidation of short positions
  • These liquidations added further upward pressure to price, causing a significant squeeze of shorts

Bitcoin Futures Perpetual Funding Rate

  • Last two weeks have seen consistent net short bias
  • Bias flipped to long after the 11% price rally on February 4th
  • Traders have switched to a net short bias again

Derivatives traders seem to expect prices to dip from here and for the bear market to continue

Spent Output Profit Ratio (SOPR)

  • SOPR describes the profitability of investors in the BTC market
  • The metric is used as an indicator of downtrending and uptrending markets
  • The metric trended in the red since prices dropped from the November all-time highs (ATH) much like in May, June and July of 2021 as indicated in red on the graph below
  • The metric has crossed over into the green again with the rally on February the 4th, which can be a potential indicator of a reversal in the price trend

14-day Market Realised Gradient

The delta gradient infers the direction and magnitude of momentum in the Bitcoin Market.

We observed a bearish divergence during the 2021 Bull run:

  • Prices were making higher highs
  • Delta gradient (purple line) was making lower lows

We can observe a potential bullish divergence currently:

  • Prices have been decreasing since reaching an ATH in November
  • Momentum (delta gradient) has been increasing during the same period
  • We saw a significant break above 0 ** with the Delta Gradient (purple line) with the recent rally on February 4th

** 0 is the line denoted in red and indicates neutral momentum. Values above 0 indicate upward momentum and vice versa when values are below 0

The market is pushing higher as momentum is increasingly positive. We could see a potential swing higher in prices over the next two weeks.