I just wanted to post this idea to document my view of the markets at this time.
Recently we can see the market has sold off, with a large decrease in open interest. The market has looked weak since then, but this is typically because positions that were not closed during the initial move down end up closing, creating another wave of selling. However after that is exhausted, the market is free to move up. In a bull market, these moves typically form the bottom. You can see a few hundred million dollars of negative delta in the image below, alongside a massive OI drop.
OI and impact on the overall market
The perp markets are starting to influence Bitcoin a lot more here as the ETF inflows have slowed significantly. We know that positive funding is typically not ideal for continuation, as it means that 1 - most active market participants are long, therefore the there cannot be much more short term buying, and 2 - longs must pay funding, decreasing their margin and forcing them to reduce their position if this funding is prolonged, which causes selling pressure.
Currently perp traders have been mostly forced out, and the market now has a bearish bias (large amount of aggressive shorts opened into arb bots / makers who are delta neutral). This will most likely lead to new highs from here after a period of consolidation, (if this situation persists).
The GBTC selling will most likely slow as coins approach the ~300k range, which we are already in. In the previous idea, I looked at the inflows and outflows of GBTC. The 200k - 300k range for GBTC was accumulated before 2019. The remaining 300k was accumulated during the bull market of 2021 (more active participants). As the GBTC positions have reduced from 600k back to 300k, I suspect outflows will slow significantly, which is bullish for Bitcoin.
Recently we can see the market has sold off, with a large decrease in open interest. The market has looked weak since then, but this is typically because positions that were not closed during the initial move down end up closing, creating another wave of selling. However after that is exhausted, the market is free to move up. In a bull market, these moves typically form the bottom. You can see a few hundred million dollars of negative delta in the image below, alongside a massive OI drop.
OI and impact on the overall market
The perp markets are starting to influence Bitcoin a lot more here as the ETF inflows have slowed significantly. We know that positive funding is typically not ideal for continuation, as it means that 1 - most active market participants are long, therefore the there cannot be much more short term buying, and 2 - longs must pay funding, decreasing their margin and forcing them to reduce their position if this funding is prolonged, which causes selling pressure.
Currently perp traders have been mostly forced out, and the market now has a bearish bias (large amount of aggressive shorts opened into arb bots / makers who are delta neutral). This will most likely lead to new highs from here after a period of consolidation, (if this situation persists).
The GBTC selling will most likely slow as coins approach the ~300k range, which we are already in. In the previous idea, I looked at the inflows and outflows of GBTC. The 200k - 300k range for GBTC was accumulated before 2019. The remaining 300k was accumulated during the bull market of 2021 (more active participants). As the GBTC positions have reduced from 600k back to 300k, I suspect outflows will slow significantly, which is bullish for Bitcoin.
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