Bitcoin has recently experienced a mixed market trend, with analysts closely monitoring on-chain data to understand the short-term trajectory of this leading cryptocurrency.
On-chain indicators show significant changes in exchange activity, with substantial outflows of Tether (USDT) and high inflows of Bitcoin (BTC) into exchanges. This trend indicates a potential "imbalance" in market dynamics, with selling pressure potentially leading to further price corrections in the short term.
Spot market trends and selling pressure indicate a potential economic recession
According to data shared by CryptoQuant analyst Onatt, over 15,000 BTC inflows have been observed in exchanges, a metric typically associated with increased selling pressure. At the same time, Tether outflows indicate decreased liquidity within these exchanges.
Tether outflows and Bitcoin inflows indicate short-term weakness
"A significant amount of Tether (USDT) is exiting exchanges, and a large inflow of Bitcoin (BTC) (>15K) has been observed @tutunculeronat."
Link 👇https://t.co/NFCLi7EpiI pic.twitter.com/6lUyTiEdNi
— CryptoQuant.com (@cryptoquant_com) December 24, 2024
Historically, this volatility has been associated with short-term price declines as traders and institutional investors reposition their portfolios amid market fluctuations.
However, Onatt points out that while these indicators suggest short-term downside risks, there seems to be no significant macroeconomic catalyst to drive a long-term bearish trend. The analyst specifically wrote:
This combination of factors could suggest that Bitcoin prices may further decline in the short term. However, from a macroeconomic perspective, there appears to be no catalyst for a long-term bearish trend following this short-term correction.
Key indicators show mixed signals in the Bitcoin market
Another analyst, TraderOasis, highlighted other indicators affecting Bitcoin's price behavior. A key observation focused on the Coinbase premium index, which failed to follow Bitcoin's rise during the last price surge. Oasis noted:
As a result, prices have pulled back. We are currently in a negative position. I expect the market to continue rising.
Notably, this disconnect suggests a lack of strong buying activity from U.S. investors, who are typically seen as important drivers of Bitcoin's upward momentum. The analyst also pointed out that funding rates have begun to decline while open interest levels have been on the rise.
A decrease in funding rates combined with an increase in open interest usually indicates that traders are opening more short positions. This pattern suggests bearish sentiment in the derivatives market, with traders expecting the downtrend to continue, or at best a period of consolidation.
Additionally, the combination of decreasing funding rates and increasing open interest suggests that the market may remain in a consolidation phase for some time. TraderOasis wrote:
I believe that due to the Christmas week, prices will consolidate. Then, a distribution movement will begin.
BTC price is moving upward on the 2-hour chart. Source: BTC/USDT on TradingView.com
Featured image created using DALL-E, from TradingView's chart