Key Points
- Despite a recent dip, Bitcoin Futures demand has soared to levels last seen in 2023.
- Traders are exercising caution due to uncertainty and potential volatility related to the U.S elections.
Bitcoin’s recent rally sparked hopes of the cryptocurrency’s value reaching new peaks. However, after a brief rise to $73k, the value dipped below $70,000. This suggests that profit-taking is underway, but it also hints at potential uncertainty in the month of November.
Bitcoin Futures Demand Soars
According to a CryptoQuant analysis, despite the dip, Bitcoin has been experiencing strong buying pressure from Bitcoin Futures whales. The last time Futures demand was this high was back in September 2023. This surge was followed by a significant bullish run until April. It remains to be seen if history will repeat itself.
The rise in Bitcoin Futures could reflect bullish expectations among Futures investors. Yet, BTC demand has slowed significantly in recent days. For instance, there was a noticeable increase in Bitcoin Spot ETF inflows over the past week. However, on the last day of October, inflows were at their lowest for the week.
Caution Prevails Among Traders
The drop in inflows from institutional buyers (ETFs) indicates a shift towards caution. This is likely a response to recent price changes and demand dynamics. On 31 October, Bitcoin exchange flows reached 67,373 BTC, higher than the outflows which peaked at 62,024 BTC on the same day.
Since then, Bitcoin exchange flows have dropped to their lower range, with inflows still higher than outflows. This suggests that selling pressure has outweighed demand, leading to the price dip.
The market has also shown a decrease in leverage appetite over the past two days. This implies that investors are uncertain about the extent of the latest retracement. This uncertainty is due to the recent wave of bullish optimism which has led many to anticipate higher prices in the coming weeks.
Bitcoin’s Open Interest has also dipped significantly, indicating that derivatives traders are exercising caution. Both the Estimated leverage ratio and the Open Interest metrics previously reached their highest 2024 levels towards the end of October.
One of the reasons for this caution could be the upcoming U.S elections, which are expected to cause some volatility. This means that Bitcoin could return to normal supply and demand activity post-election. The election outcome could also influence the level of demand, and combined with the surge in Futures, could lead to extremely volatile movements.
