As Bitcoin faces a recent roadblock in its recovery and falls below $68,000, CryptoQuant shares six important charts to watch next week.
Bitcoin rose 11% last week, jumping from $62,800 to $69,000. However, the price has since returned to $67,000, down just 0.35% in the past 24 hours.
According to a recent analysis by CryptoQuant, there are six important charts for investors to monitor as the market prepares for the future in the coming days.
Bitcoin Correct Drawdown and Cumulative Return
First, CryptoQuant confirmed that Bitcoin is currently just 6% below its all-time high (ATH) of $73,600, which it reached in March.
Analytical Resources shared a “Bitcoin Bull Market Correction Drawdown” chart that highlights the patterns observed during the market cycle. The current 6% drawdown is a modest correction compared to the historical corrections seen in previous market cycles.
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This chart shows that Bitcoin’s recent price movement is a typical bull market correction, similar to patterns seen in previous cycles. Such corrections are part of Bitcoin’s natural price discovery process and are often followed by a period of rising prices again.
Another important chart to consider is the “Bitcoin Cumulative Halving Return Index” which compares Bitcoin’s performance during the past halvings of 2012, 2016, and now 2024.
Each of these cycles showed strong movement in the fourth quarter. This pattern suggests that Bitcoin’s current price movements may not be a coincidence, but a seasonal effect that may repeat itself again.
ETF inflow
One of the main factors behind Bitcoin’s recent price surge has been an influx of capital from institutional investors, particularly those involved in Bitcoin exchange-traded funds (ETFs).
The “BlackRock Balance and Balance Change” chart reveals that BlackRock alone purchased 15,950 BTC last week, which equates to a $1.08 billion investment. Additionally, other major ETF providers such as Fidelity and Grayscale have also made significant investments.
While Bitcoin remains the main focus, Ethereum is also seeing significant activity. The “ETH: Accumulation Address Balance” graph shows that accumulation addresses currently hold 19.2 million ETH, suggesting significant long-term interest in Ethereum.
Additionally, ETF trading inflows to Ethereum reached $48 million last week. Ethereum’s price has been under pressure recently, but this accumulation trend could indicate the market is gearing up for a recovery.
Rising Bitcoin OI and increasing retail demand
However, one area of concern is the increase in open interest in Bitcoin futures. The “Bitcoin: CME Futures Open Interest” chart shows that open interest on the Chicago Mercantile Exchange (CME) has reached an all-time high of $12 billion.
In particular, high levels of open interest may indicate that a market correction may be coming, especially if a large amount of leverage is involved.
Additionally, the open interest on the centralized exchange (CEX) rose to $21 billion, close to an all-time high. CryptoBasics recently confirmed that total open interest across all platforms surged to a new peak of $40.5 billion yesterday.
Finally, the “Changes in Retail Investor Demand” graph shows that retail investors are re-entering the market. The 30-day moving average (30DMA) of retail demand rose on renewed interest from retail investors.
Typically, increased retail participation along with inflows from institutional investors can lead to higher prices. However, the influx of retail investors may also lead to increased market volatility.
Disclaimer: This content is informational and should not be considered financial advice. The views expressed in this article may include the personal opinions of the author and do not reflect the opinions of The Crypto Basic. We encourage our readers to conduct thorough research before making any investment decisions. Crypto Basic is not responsible for any financial losses.
