After undergoing a significant long squeeze last week, bringing BTC back to the $108,000 support level, this week is starting with strong bullish volatility. However, the supply/demand balance is not optimal to support a bullish rebound.
BTC solid on its support
After last week’s correction, the price of Bitcoin has once again rebounded from support at $108,000 to $110,000. Bringing further relief to recent entrants, short-term price action remains within a range of $108,000 to $119,000. Is the current supply/demand balance conducive to an attempt at a bullish recovery for BTC?
Consolidation within the range
After undergoing a significant long squeeze last week, bringing BTC back to the $108,000 support level, this week is starting with strong bullish volatility. The BTC price is now in the middle of its range, around $114,000.
From a certain perspective, the ball is in the center and continues to bounce between the bullish and bearish limits of the range.
It is important to note the market’s rapid but critical move below the realized price of short-term investors. This dynamic could have signaled a major deterioration in the short-term trend if the price had not recovered quickly.
To date, the structure remains bullish, with investors returning to unrealized profits on average.
Supply/demand balance
Now that a new rebound has been established, it is crucial to ask whether the inflows of capital are sufficient to fuel a viable bullish continuation and a possible break above the $117,000 to $119,000 resistance level.
Regarding spot markets, particularly spot BTC ETFs in the US, there appears to be no demand at this time, with recent data even showing moderate net selling volumes.
This suggests that the bullish volatility seen earlier this week was not influenced by US ETFs.
On centralized exchanges (CEX), the main trading venues for spot BTC, the picture is mixed. While strong spot demand absorbed selling pressure before the traditional markets closed on Friday, recent purchases came rather late.
In fact, spot buying and selling volumes have begun to alternate over the last 24 hours, particularly on Binance, with a slight inclination towards demand. As for the start of this bullish recovery, there is no indication that CEX demand flows are responsible.
Finally, in the derivatives markets, the bias is clearly upward, with demand peaks exceeding 250 BTC per hour during Monday’s volatile rally.
This suggests that new long positions have been opened recently, close to the local peaks of $112,300 and $114,700. While this demand may contribute to market strength in the short term, it again increases speculative risk, raising the chances of another long squeeze occurring as overall demand slows.
Summary of this on-chain analysis of BTC
After undergoing a significant long squeeze last week, bringing BTC back to the $108,000 support level, this week is opening with strong bullish volatility.
From a certain point of view, the ball is in the center and we are continuing to see ping pong behavior between the bullish and bearish limits of the range, estimated at $119,000 to $117,000 and $110,000 to $108,000, respectively.
In terms of supply/demand balance, US ETFs are recording slight outflows, while centralized exchanges are showing late purchases. In the derivatives markets, the bias is clearly upward, suggesting that new long positions have been opened recently. Overall, the demand flow profile is not optimal to support a viable bullish rebound, with a lack of spot demand offset by demand in the derivatives markets, which increases the risk of a bearish reversal.
