Bitcoin price dipped below $47,000 again on December 13. A bitter selloff caused the downturn. Bitcoin has rallied from the downturn and now trades at $47198. Bitcoin’s Market capitalization remains at $890 billion.
Bitcoin Exchanges Struggle With Supply
Although Bitcoin tested its supported level several times, showing a lack of liquidity and demand, exchanges have had their hands complete with increasing demands for BTC. Bitcoin liquidity reduced on exchanges from a report from Santiment. The report assessed the supply of Bitcoin on exchanges over thirty-one months, saying that supply was comparatively low.
Some factors have caused the low supply of Bitcoin on exchanges. The first reason is price volatility. The rapid changes in the digital asset price had added to the lack of price stability of Bitcoin. However, inadequate liquidity of $BTC at exchanges signal a selloff risk. The selloff risk is a looming disaster that ought to be curtailed as soon as possible.
On-Chain Data Thinks Otherwise
Technical analysts have poured in to study the market selloff. Few of the analysts compared the market trend of Bitcoin to one that happened in May, about seven months ago. The analysts noted that BTC had hit a price correction, reaching almost 40% in that period. The price correction occurred after Bitcoin hit $69,000 ATH. While comparing the selloff data, Will Clementele says a remarkable difference exists between the two markers.
Whales and large fintech enterprises caused the critical selloff in May. The investors bought Bitcoin and invested massively into the digital asset at the time. Now, the investors are taking advantage of the market’s downtrend to purchase more Bitcoins. The multiple purchase of Bitcoin’s dip caused the massive selloff experienced in the market.
However, that is not the total picture. Another analyst, Willy Woo, reined in on the market trend for Bitcoin. He says significant long positions that moved the price of the asset ahead some months back has since been liquidated. In essence, the price correction the Bitcoin market experienced resulted from Bitcoin futures being liquidated. Willy Woo believes a reset is taking place.
Bitcoin Pullback Likely
The analyst examined the buy/sell heatmap before submitting his comments on the significant selloff in Bitcoin. Using on-chain data, Woo looked at a considerable dip in spot volumes. He said the reduction in spot assets had been happening for some time. Although, it has been moderate. From all indications, it appears that Bitcoin’s spot volume presents no further threat. The analyst believes no further selloff will happen. He thinks the spot and futures market will correct themselves.
The analyst thinks that Bitcoin futures have been flushed, which means investors are not interested in keeping long positions. However, the extended situation for the Bitcoin market and its sentiments have caused anxiety for several retail investors. This group of people will hold on to the faint hopes of the on-chain data, indicating that the Bitcoin market will end in a pullback.