Key Points
- Bitcoin’s supply in profit has dropped from 99% to 76%, indicating a significant portion of BTC holders are now in unrealized loss.
- Institutional “dip-buying” is gaining traction, potentially setting the stage for a short squeeze.
Bitcoin’s profit supply has seen a significant decrease, with a large number of BTC holders currently experiencing unrealized losses. This decline has led to speculation about whether this phase of profit-taking will result in further decreases or if it’s a healthy consolidation before the next upward move.
Bitcoin Faces Strong Resistance
Bitcoin faced significant resistance at $97K, which led to a sharp rejection and a subsequent drop to $82K. Despite this pullback, 76.08% of Bitcoin’s supply remains in profit, the lowest it’s been in six months. This indicates that the majority of Bitcoin holders are still in the green, however, it also means that 23% of the circulating supply is in unrealized loss, equating to around 4.56 million BTC.
As more Bitcoin holders move into unrealized loss, some may choose to sell to avoid further losses. To counteract this sell-side liquidity, volume indicators are crucial. Trading volume has surged 178.22% to $43.12 billion, while net deposits on exchanges have increased by 3.96%. This shows that sell-offs are outweighing buys across major exchanges.
The Role of Institutional Investors
With U.S. investors’ buying pressure remaining low due to economic uncertainty, it appears that retail buyers aren’t stepping up to absorb the selling pressure. This could indicate the involvement of third-party players, possibly institutions, in influencing the market’s next move.
Alongside weak spot buying, Bitcoin’s Estimated Leverage Ratio (ELR) has seen a dramatic increase, suggesting that derivatives traders are not de-leveraging, but rather increasing leverage to take on higher-risk positions. On March 9th, Bitcoin experienced a 6.41% drop to $80K, resulting in $195.86 million in liquidated long positions.
Institutional “dip-buying” is becoming more popular, potentially setting the stage for a short squeeze that could drive Bitcoin to retest the $85K resistance zone. However, breaking through this resistance remains a challenge. If sell-offs escalate, it could lead to further liquidations, pushing Bitcoin below $80K again.
In conclusion, institutional capital is absorbing sell-side liquidity from traders breaking even after Bitcoin’s 17% weekly decline. However, the risks associated with “dip-buying” remain high.
