Bitcoin (BTC) Price Rally Ahead As Sell-Side Liquidity Drops

Highlights

Bitcoin's demand has surged significantly as sell-side liquidity plummets.
Bitcoin options data shows strong bullish sentiment for BTC.
Bitcoin ETF inflows have once again resumed past $400 million per day.

The world’s largest cryptocurrency Bitcoin has been showing strength by flirting above the $70,000 levels. Market investors are confused as to which direction the Bitcoin price could be heading from here onwards amid the current macro setup and fluctuating ETF inflows.

Bitcoin Sell-side Liquidity At Historic Lows

In its latest findings, on-chain data provider CryptoQuant reported that Bitcoin’s demand has witnessed a remarkable surge alongside a notable decline in sell-side liquidity. This phenomenon has led to liquid inventory levels plummeting to unprecedented lows, signaling potential implications for the cryptocurrency’s market dynamics.

According to CryptoQuant’s analysis, Bitcoin’s current sell-side liquidity inventory is poised at historic lows. Furthermore, the projections suggest that it may only accommodate the ongoing demand growth for the next 12 months. Notably, these estimates focus solely on accumulating addresses, underscoring the intensity of Bitcoin’s demand surge relative to available supply.

However, the data highlights a significant imbalance between the increasing appetite for Bitcoin and the diminishing availability of sell-side liquidity. This further raises questions about the potential impact on Bitcoin’s price trajectory and market sentiment moving forward.

According to crypto analyst Ali Martinez, it seems that Bitcoin is breaking out of an ascending triangle pattern in shorter time frames. This breakout could potentially propel the Bitcoin price towards $71,800, provided that the $70,400 support level remains intact.

It appears that #Bitcoin is breaking out of an ascending triangle on the lower time frames, which could see $BTC rise toward $71,800 as long as the $70,400 support holds. pic.twitter.com/CQUyrc9vkv

— Ali (@ali_charts) March 26, 2024

Bitcoin Options Demand Bullish, Ethereum Falters

In a recent market update from QCP Capital, early indications suggest encouraging inflows into Bitcoin (BTC) spot exchange-traded funds (ETFs), with notable contributions from Fidelity, contributing to BTC’s surge beyond the $70,000 threshold.

Key insights from the options market reveal a structurally bullish sentiment towards BTC, juxtaposed with apprehensions regarding potential downside risks for Ethereum (ETH). Notably, there is also a consistent demand for BTC call options with strike prices exceeding $100,000 and expirations extending to December. Conversely, there’s a substantial purchase of ETH put options with a strike price of around $2,800 and expirations set for April, amounting to approximately 20,000 ETH.

The market dynamics have led to a notable shift in ETH risk reversals, with values declining to -5% to the downside once again. This trend serves as a noteworthy indicator, reminiscent of previous market downturns.

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Bhushan Akolkar

Bhushan is a seasoned crypto writer with over eight years of experience spanning more than 10,000 contributions across multiple platforms like CoinGape, CoinSpeaker, Bitcoinist, Crypto News Flash, and others. Being a Fintech enthusiast, he loves reporting across Crypto, Blockchain, DeFi, Global Macros with a keen understanding in financial markets.   He is committed to continuous learning and stays motivated by sharing the knowledge he acquires. In his free time, Bhushan enjoys reading thriller fiction novels and occasionally explores his culinary skills. Bhushan has a bachelors degree in electronics engineering, however, his interest in finance and economics drives him to crypto and blockchain.

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