Bitcoin’s fall to $61,000 over the weekend is a result of market participants reducing their exposure to the digital asset ahead of its scheduled halving on April 20, according to the latest CryptoQuant weekly report. That's what it means.
Analysts say the volume of sell orders now exceeds buy orders in the perpetual futures market, as traders are unwinding long positions to take profits. This is evidenced by the buy/sell ratio being below 1. If buy orders dominate sell orders, this ratio will exceed 1.
Traders reduce exposure to Bitcoin
Total open interest decreased from 250,000 BTC to approximately 220,000 BTC as traders reduced their exposure to Bitcoin. A short-term holder (a company that has held BTC for less than 6 months) has offloaded the asset to realize a higher rate of return from the recent rise in the asset to his $71,000.
Funding interest rates also took a hit, turning negative for the first time since January 2024. CryptoQuant said negative funding rates indicate that traders are willing to pay for opening and maintaining short positions.
Additionally, growth in Bitcoin demand from whales (1,000 to 10,000 BTC holders) has slowed following the fast pace seen last month. The month-on-month growth rate in the total balances of these large companies shrank from 11% in mid-March to 8%.
Similarly, demand growth from US permanent BTC holders (accumulation addresses) and exchange-traded funds (ETFs) has also slowed, with the former hitting a monthly record 161,000 BTC from 204,000 BTC in the previous month. did. The ETF has recorded net outflows for three consecutive trading days, with outflows from Grayscale's GBTC exceeding cumulative inflows.
Bitcoin remains in a bull market
Despite demand growth and plummeting open interest, BTC is still in a bull market phase. Analysts at CryptoQuant said the recent decline was necessary to reset traders’ unrealized gains to zero, and the move is seen as a bottom signal in the bullish cycle. Bitcoin’s value is also approaching the $58,000 price realized by traders, which has been support this season.
“From a long-term business cycle perspective, Bitcoin is still in a bull market stage. The CryptoQuant Bull Market Cycle Indicator is still in a bull market stage. However, once the price crosses $70,000, “This suggests that the market has entered an overheating phase,” the company said.
