Key Points
- Spot traders bought twice the amount of BTC that institutional investors sold in the past week.
- Divergence in the derivatives market suggests a potential rally in the cryptocurrency market.
Despite a largely bearish activity in the cryptocurrency market that saw the market capitalization drop to $3.15 trillion, Bitcoin’s [BTC] movement remained minimal, losing only 0.47% in the past week.
Spot Traders vs Institutional Investors
This stability is largely attributed to spot market traders who purchased BTC, thereby offsetting the selling activity of institutional investors. In the past week, Bitcoin spot ETFs in the U.S. experienced a net market outflow of -$552.5 million indicating a higher selling activity.
However, according to Coinglass, $1.07 billion worth of BTC was bought from the market and moved into private wallets, nearly twice the amount that institutional investors sold. This suggests that spot traders are more bullish and if this trend continues, a significant price surge is likely.
Korean and U.S. Investors
Interestingly, this major market purchase was not driven by Korean and U.S. investors who are usually the major players during spot market buying activity. Both Korean and U.S. retail investors have been consistently reducing their BTC purchases.
However, this could present an opportunity for BTC. If these investors resume buying BTC, the asset is likely to experience a significant price swing, adding to the existing buying momentum in the spot market.
Derivatives Market Divergence
In the derivatives market, there has been a divergence in key market metrics suggesting a potential rally. Despite a massive wave of long liquidations, buying volume has surged. According to CryptoQuant data, buying volume has increased significantly relative to selling volume.
This divergence indicates high trader conviction and suggests a likely price bounce to a higher level, despite a substantial long liquidation of $21.9 million. Long liquidations occur when the asset’s price moves against buy orders by derivative traders expecting an uptrend.