Bitcoin has recently experienced mixed market movements, with analysts closely monitoring on-chain data to understand the near-term trajectory of the leading cryptocurrency.
On-chain metrics indicate a notable shift in exchange activity, with Tether (USDT) seeing significant outflows while Bitcoin (BTC) inflows into exchanges remain high. This trend suggests a potential “imbalance” in market dynamics, where selling pressure could lead to further price corrections in the near term.
Spot market trends and selling pressure signal a possible downturn
According to data shared by CryptoQuant analyst Onatt, more than 15,000 BTC were observed moving across exchanges, a metric typically associated with a higher likelihood of sell-offs. At the same time, Tether outflows imply a reduction in liquidity within these exchanges.
Tether outflows and Bitcoin inflows signal near-term weakness
“Significant amounts of Tether (USDT) are exiting exchanges, and a large influx of Bitcoin (BTC) (>15,000) has been observed entering exchanges.” – From @tutunculeronat
Connection
https://t.co/NFCLi7EpiI pic.twitter.com/6lUyTiEdNi
— CryptoQuant.com (@cryptoquant_com) December 24, 2024
Historically, such movements have been linked to short-term price declines, as traders and institutional investors reposition their portfolios amid market volatility.
However, Onatt noted that while these indicators suggest near-term downside risk, there appears to be no significant macroeconomic catalyst to drive a sustained downtrend. The analyst in particular writes:
This combination of factors could indicate the potential for further near-term decline in the price of Bitcoin. However, from a macroeconomic perspective, there does not appear to be a catalyst that would necessitate a sustained downtrend after this short-term correction.
Key indicators suggest mixed signals in the Bitcoin market
TraderOasis, another analyst, highlighted additional parameters that influence Bitcoin price behavior. A key observation focused on the Coinbase Premium Index, which failed to track Bitcoin’s upward movement during its latest price surge. The Oasis observed:
As a result, the price dropped. We are now in negative territory. I expect a pause in the market for the continuation of the rally.
Notably, this disconnect indicates a lack of strong buying activity from US-based investors, often considered a significant driver of Bitcoin’s bullish momentum. The analyst also noted that funding rates have started to decline while open interest levels are increasing.
Falling funding rates coupled with rising open interest typically indicates that traders are opening more short positions. This pattern suggests bearish sentiment in the derivatives market, with traders expecting a continuation of the downtrend or, at best, a period of sideways movement.
Furthermore, the combination of falling borrowing rates and rising open interest suggests that the market may remain in a consolidation phase for a while. TraderOasis wrote:
I think the price will move sideways due to the Christmas week. Then the distribution movement will begin.
Featured image created with DALL-E, chart from TradingView