Glass node detailed report shows that Bitcoin’s November correction is unlikely to continue. This current market correction is actually the least severe in 2021.
Leverage across #Bitcoin derivatives markets reached ATHs this week, suggesting a squeeze in either direction may play out.
Meanwhile short, and long-term holders own more profitable $BTC supply than during September's dip.
Read more in The Week Onchainhttps://t.co/uHD3AEp6MA
— glassnode (@glassnode) November 29, 2021
The deepest pullback this year came in May-July when bitcoin fell -54% from its high. In September, the decline reached -37.2%. BTC Corrections in January, February, and April reached -29.4%, -24.2%, and -26.5% respectively . The current correction in November barely exceeded 20%.
Image Source Glassnode
Open interest (OI) for bitcoin options in October-November varied in the range of $12 billion- $14 billion before declining to $10 billion after expiration on November 26.
Futures’ open interest is also just below all-time-highs when denominated in BTC, reaching just above 400k BTC in total nominal value.
Highlighted in the chart below are a number of short and long squeezes, where open interest rapidly decreased as price volatility forced traders to cover their positions. With leverage in futures markets near an ATH, there is a risk that leverage may unwind, as has been demonstrated in almost all prior instances where open interest surpassed 350k BTC in size.
Image Source Glassnode
Funding rates for perpetual contracts indicate a slight overweight of long positions. The indicator declined along with the fall in price, which indicates a more cautious attitude of traders.
However, whilst funding is positive, the decline is considerably notable, which doesn’t rule out the possibility that a large portion of the market is net short as price declines. It is reasonably plausible for a leverage squeeze to play out in either direction given this observation.
Image source Glassnode
Analysts drew attention to the increasing dominance of the Chicago Mercantile Exchange (CME) in the bitcoin futures market. In terms of OI, the market share of this regulated platform has grown from 10% at the beginning of September to the current 19.3%. In terms of trading volume, the share of CME during this period increased from 1.4% to 6%.
Image source Glassnode
Over the past week, the bitcoin price tested the level of $53,500, which coincides with the purchase price of BTC by short-term investors. Analysts noted that this week, BTC price traded to a low of $53.5k, which does suggest a potential front-running of that psychological cost basis support level was in play. This is now the second retest of the STH Realised Price in the current trend, and if held, has similarities to major corrections observed in 2017, where it acted as a reliable support.
Image Source Glassnode
According to analysts, there are two events in play for realized profits and losses. Realised Profits (green) have declined alongside the correction, potentially signaling reducing profit-taking, and growing investor conviction.
Realized Losses spiked (pink) to $800M per day, similar to significant sell-offs in April, and July, but much lower than the major sell-off in May. This suggests a reasonable flush out of spot top buyers has occurred but does not rule out further sell-side.
A rise in prices will reduce the likelihood of a negative scenario. The key will be to keep the price above the $53,000 level, analysts added.
Image Source Glassnode
According to experts’ calculations, 13.35 million BTC are at the disposal of long-term investors. Since its peak in November, this category of market participants got rid of 5.8% of purchased coins.
Image Source Glassnode
In a conclusion, Both Long and Short-term Holders are holding more profitable supply than September’s correction, which can generally be viewed as constructive for price.
Earlier, the founder of SkyBridge Capital Anthony Scaramucci saw the last correction as an opportunity to build up positions. In his opinion, cryptocurrencies have the fundamental potential for further growth.
Not to worry on market sell-off: This is a buying opportunity https://t.co/fZMwS2W2M7
— Anthony Scaramucci (@Scaramucci) November 27, 2021
Disclaimer: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic’s opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
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