Despite the price pullback, the percentage of Bitcoin bulls continues to rise—what else should we pay attention to?

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Although the price of Bitcoin (BTC) has significantly dropped, its long positions have increased, indicating that traders have fallen into a bull trap. In fact, when BTC's price dropped to around $92,000, the long position ratio on Binance and OKX rose significantly.

This trend suggests an impending turning point, where excessive bullish sentiment may reverse, triggering a potential price recovery as shorts enter and longs exit.

The pullback may stimulate profit-taking or incite shorts to take advantage of high funding rates, leading to selling pressure.

Nevertheless, sustained positive funding rates indicate potential market confidence, although caution may be warranted. If funding rates remain stable or reverse, it could signal potential market trends. The stability or reversal of funding rates may determine Bitcoin's short-term trajectory.

Demand Faces Obstacles

Bitcoin experienced a significant surge, rising from $40,000 to $74,000 by the end of Q1 2024.

This surge was driven by increased demand, as indicated by a significant drop in over-the-counter (OTC) desk inventories. During this period, OTC desks reported the largest monthly inventory drop of the year, decreasing by 26,000 BTC—this is a sign of tightening supply.

The total balance of OTC desks has also decreased by 40,000 BTC since November 2020, further indicating that while demand is increasing, supply is decreasing.

The decline in OTC balances and rising prices can be seen as strong signals of robust momentum. This relationship also suggests that if OTC inventory levels continue to decline, Bitcoin's price may further increase, especially if demand remains.

However, demand will face key resistance between $97,500 and $99,800, where 924,000 wallets hold over 1.19 million BTC.

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