Bitcoin's (BTC) price rise may face temporary resistance as its rise to a record high appears to have led to profit-taking among holders of the largest cryptocurrency by market capitalization.
This is the message of the imbalance between potential sellers and buyers in the aggregated Bitcoin order book on 33 central exchanges. The gap between the total value of Bitcoin sell orders, the so-called ask side, and buy orders, the bid side, within 2% of the market price has widened to nearly $100 million, according to Paris-based Kaiko. That's about five times the usual value.
Additionally, there has been relatively more liquidity on the ask side since late January, representing potential supply to the market, a sign that investors are increasingly looking to sell. Bitcoin is up almost 60% since the start of the year.
“The current discrepancy is notable as BTC ask depth of 2% has exceeded bid depth for the longest period since early 2021 (the start of our data). This typically indicates limit orders building on the sell side of the order book and could mean that traders are taking profits as BTC approaches its all-time high,” said Dessislava Aubert, research analyst at Kaiko, in an email.
Market makers could be partly responsible for the imbalance in the order books, Aubert said. Market makers undertake to provide liquidity to the order book and are always on the opposite side of investor trades. They constantly hedge their exposure to maintain a directional neutral portfolio.
“We are also seeing a sharp increase in demand and net purchases on most exchanges in recent days,” he said. [the imbalance] “could be related to the positioning of market makers,” Aubert said.
The chart below shows the cumulative volume delta (CVD) on major spot exchanges since February 25th. A positive and rising CVD indicates net buying pressure, while a negative CVD suggests the opposite. CVD on Binance, the largest crypto exchange by trading volume, has grown by almost $1 billion since this date. Other exchanges have also contributed to the net buying pressure in the market.
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