Key Points:
Bitcoin options skew and stablecoin activity indicate that fear remains under control, suggesting limited downside pressure.
The liquidity of spot Bitcoin ETFs and the positions of top traders confirm liquidity and resilience, indicating a potential recovery to above $120,000.
On Monday, Bitcoin (BTC) fell to an 11-day low of $114,755, sparking market discussions about whether the historical high set on Thursday signifies the end of this bull market. However, four independent indicators suggest that this adjustment is merely temporary, and Bitcoin is expected to quickly regain the $120,000 mark.
The Bitcoin options skew indicator has risen to its highest point in nearly four months, highlighting sudden and excessive market panic. In a balanced market, the skew typically ranges between -6% and +6%. When demand for protective put options increases, this indicator rises above the neutral range; conversely, it falls below the range under FOMO (fear of missing out) sentiment.
Historical data shows that such situations often present strong buying opportunities. On August 5, after a similar skew surge, Bitcoin rose by $9,657 within six days. Similarly, on April 9, when Bitcoin fell to $74,587, the skew reached 13%, forming a double bottom structure and rebounding by $11,474 within four days.
Some investors are concerned about potential outflows from spot Bitcoin ETFs, especially after a net inflow of funds ended on Friday after seven consecutive days. However, market panic seems to be exaggerated. Between July 31 and August 5, the ETF experienced a net outflow of $1.45 billion, resulting in only a slight 6% adjustment to $112,000.
The market size of spot Bitcoin ETFs is $152 billion, so a 1% inflow or outflow in the short term is considered normal. Given the low volatility in recent months, market liquidity remains sufficient to accommodate large ETF redemptions. Notably, the last time Bitcoin fluctuated more than 12% within 72 hours was on April 7.
Positions of top traders on OKX and Binance show that the recent price drop has not triggered a significant reaction. The relevant data covers spot, leveraged, and futures markets, providing a comprehensive reflection of professional investors' positions.
Although top traders reduced their long positions between Thursday and Friday, the long-short ratio is currently stabilizing. Some believe these traders did not buy during the pullback at $115,000, and they may be waiting to add positions after a retest at $112,000.
The demand for stablecoins in China provides further insight into market sentiment. Active retail trading often leads to a 2% premium of stablecoins over the official USD exchange rate. When stablecoins trade at a discount of more than 0.5%, it typically reflects market panic, prompting investors to withdraw from crypto assets.
Currently, Tether (USDT) is trading at a discount of 0.8% in the Chinese market, indicating only mild withdrawal pressure. This figure has remained stable since Friday evening, suggesting that market sentiment has not continued to deteriorate.
Considering the four indicators of options skew, ETF fund flows, top trader positions, and stablecoin demand, the current Bitcoin pullback appears to be a phase adjustment. $114,755 is very likely to become the bottom of this pullback.
Related: Strategy increased its holdings by $51.4 million, acquiring 430 Bitcoin (BTC) last week.
Original: “Is the Bitcoin (BTC) price bottom at $114,700? Data suggests it’s time for a reversal”
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