The price of Bitcoin reached an all-time high before retreating again, as the metrics for net inflow and derivatives align with the possibility of a rise.
After reaching an all-time high, the net inflows for Bitcoin, the NVT Golden Cross pressure, positive funding rates, and increased derivatives activity indicate strong momentum and the possibility of renewed equivalent gains.
Since early August, the net flow metric for the Bitcoin [BTC] exchange has approached a notable bottom, reflecting patterns observed before the rallies of 2017 and 2021.
Historically, such declines have often signaled the beginning of the final stage of sharp rises in previous bull markets. On August 13, the price of Bitcoin reached an all-time high of $124,457 before retreating to $120,895 at the time of publication.
It has become clear that selling pressure from long-term holders has diminished.
Thus, this suggests that the market may enter a phase where supply constraints could intensify upward momentum in the coming weeks.
Does the NVT Golden Cross indicator signal a turning point in the market?
At the time of writing this report, the NVT Golden Cross indicator stood at 0.2709 after a 53.92% decline, indicating a significant drop in valuation relative to transaction activity.
Historically, similar sharp declines have coincided with market bottoms that preceded strong rallies.
This decline reflects a potential decrease in the value of the Bitcoin transaction network relative to its market value. Therefore, if this pattern continues, Bitcoin may be positioned for a recovery phase.
Furthermore, the rapid pressure of this indicator enhances the likelihood of renewed bullish activity, making it a critical metric for traders to monitor closely.
Source: CryptoQuant
Will positive funding rates continue to support upward momentum?
The BTC OI weighted funding rate stabilized at 0.0137% at the time of publication, reflecting steady positive sentiment among leveraged traders.
Sustained positive funding indicates that buyers are willing to pay premiums to maintain their long positions, which often bolsters price stability in strong upward trends.
Therefore, this stable financial support may continue to bolster upward momentum if it persists. However, if funding rates rise excessively, it could indicate a congestion of long positions and the potential for corrections.
Currently, the current readings indicate a healthy bullish bias with no signs of over-leverage that could lead to sharp pullbacks.
Source: CoinGlass
Liquidation and derivatives data indicate...
Over the past 24 hours, Bitcoin has seen short liquidations worth $24.28 million against $17.16 million in long purchases, as of the time of writing this report, indicating a forced exit from bearish positions.
Meanwhile, derivatives metrics have risen: trading volume increased by 65.37% to $149.47 billion, open interest (OI) rose by 4.14% to $83.76 billion, options volume jumped by 127.92% to $9.43 billion, and open interest (OI) for options increased by 5.19% to $57.15 billion.
These aggregated data indicate that institutional and retail participants are increasing their exposure, thereby amplifying market liquidity and the potential for volatility as Bitcoin trades just slightly below its all-time highs.
Source: CoinGlass
In conclusion, the alignment of historical net inflow patterns for Bitcoin, the heavily compressed NVT Golden Cross indicator, positive funding rates, and rising derivatives activity paints a strong bullish outlook.
These combined factors suggest that Bitcoin may be preparing for another significant upward push, potentially extending its equivalent phase.
