- CME open interest in bitcoin rose, suggesting a drop in volatility.
- Miner revenue fell while selling pressure mounted.
According to a Jan. 31 tweet by Arcane Research, Bitcoin’s [BTC] The rally slowed. Despite this, institutional interest in Bitcoin continued to grow.
Ahead of the curve – January 31st
Bitcoin momentum has stalled and we are beginning to see signs of heightened risk appetite from offshore longs while institutional participation remains high as the FOMC press conference approaches.https://t.co/E6m19OnqrZ
— Arcane Research (@ArcaneResearch) January 31, 2023
Read Bitcoins [BTC] Price prediction 2023-2024
One indicator of high institutional interest in Bitcoin was the growing CME Open Interest in Bitcoin. According to Arcane Research, the proportion of open interest in Bitcoin not related to exchange-traded funds (ETFs) increased from 53% to 57%.
This surge, along with a strong institutional investor presence in bitcoin futures, is a positive sign. The CME played a key role in determining Bitcoin’s price and was a driving force behind significant market shifts in October 2020 and April 2021.
Source: Arcane Research
Along with growing institutional interest, implied volatility for BTC decreased. For the past seven days, bitcoin has remained relatively stable, oscillating around $23,000, causing implied volatility to decrease.
At press time, implied volatility was in the low 50s, even for longer periods. This was similar to early November when the options market predicted a slower pace in the market.
Source: Arcane Research
miners fight
Along with increasing institutional interest in the Bitcoin derivatives market, retail investors have also gained interest in Bitcoin. According to Glassnode, the number of addresses containing more than 0.01 coins in their addresses has increased over the past month.
At press time, the number of Bitcoin addresses with more than one coin hit an all-time high of 4.21 million.
However, while retail investors showed interest in Bitcoin, miners weren’t having much fun. Over the past week, Bitcoin miners’ earnings have dropped significantly. In addition, the rising electricity prices also had a negative impact on the miners.
Hashrate Index analysis of how US electricity prices have impacted the bitcoin mining industry in 2022. The twin pressures of rising electricity prices and falling bitcoin prices have led to the bankruptcy of some of the largest companies like Core Scientific. https://t.co/k3opxZFToL pic.twitter.com/JkL0p3oLSH
— Wu Blockchain (@WuBlockchain) January 31, 2023
This could increase selling pressure on miners, which could encourage them to sell their holdings and negatively impact the price of BTC.
Source: Glassnode
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Another indicator of increasing selling pressure on holders would be the rising MVRV ratio, as documented by Santiment. This suggested that most addresses holding bitcoin could benefit if they sold their positions.
The long/short indicator was negative, suggesting that short-term holders would benefit most from selling their positions. It remains to be seen whether these short-term holders will decide to sell their holdings or continue with HODL.
Source: Santiment
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