The Bitcoin price rose 5.5% on August 6, but struggled to hold above $57,000 despite positive momentum in traditional financial markets. On August 7, the Euronext 100 index rose 2.2%, while oil prices surged 2.8%. This suggests that the Bitcoin (BTC) price correction is due to market-specific factors rather than global economic conditions, with derivatives indicators indicating a lack of enthusiasm.
Spot Bitcoin ETF and ‘Mr. 100’ Fund Outflows Spark Confusion
Some analysts say Bitcoin’s weakness is due to whales reducing their positions after a long period of accumulation, including a prominent group known as “Mr. 100.”
According to Bitcoinator data, the address linked to “Mr. 100” reached its peak balance of 73,067.66 BTC on August 6 after accumulating 3,390 BTC over 6 days. However, two withdrawals totaling 5,952.59 BTC occurred on August 7. Some blockchain analytics firms, such as Arkham Intelligence, believe that this address belongs to the South Korean exchange Upbit, but this has not been confirmed. Nevertheless, the address is being closely watched due to its significant stake.
The recent outflow from Mr. 100 has triggered an alert. The last three outflows coincided with local highs. For example, between July 25 and July 27, when Bitcoin was near $67,500, around 2,020 BTC were withdrawn. Similarly, on May 22, 1,000 BTC were withdrawn near Bitcoin’s local high of $70,000. Before that, on March 9, 1,010 BTC were transferred when BTC was at $68,500. This movement suggests that the outflow on August 7 could indicate a change in strategy or that $57,000 is a local high.
Additionally, spot Bitcoin exchange-traded funds (ETFs) in the US experienced a net outflow of $554 million between August 2 and August 6, impacting funds beyond Grayscale’s GBTC. So even though on-chain metrics show whales accumulating below $60,000, investor sentiment remains cautious, influenced by entities considered “smart money” with a history of accurate market timing.
Bitcoin Derivatives and Stablecoin Flows Show Lack of Confidence
To gauge whether Bitcoin’s recent price weakness will continue, we need to look at derivatives indicators and stablecoin demand. Retail traders often use perpetual futures, which are derivatives that closely track the spot market price. Exchanges balance risk exposure with an 8-hour fee known as the funding ratio. The funding ratio is positive when buyers demand more leverage, and negative when sellers require additional leverage.
Bitcoin’s funding rate has remained below 0.01% for the past few weeks, which is equivalent to 0.9% per month, indicating a neutral market. In particular, there have been brief periods of negative funding rates, suggesting that bears are not confident in selling below $60,000.
Options data further confirms the temporary increase in demand for downside protection. The put-call volume ratio on Deribit is close to 1, reflecting balanced demand between call (buy) and put (sell) options. While call options volumes have historically been much higher, the unusual demand for put options led to this shift between August 5 and August 6.
Related: Bitcoin Volatility Hits 20-Month High, Traders Hedge Against Further Downside
Finally, looking at stablecoin demand in China provides additional insight. Stablecoins typically trade at a premium of 2% or more to the official US dollar rate due to high retail demand for cryptocurrencies. Conversely, a discount typically indicates fear, with traders eager to get out of the crypto market.
On August 7, the premium for China’s USDC stablecoin fell to 1%, indicating weak buying demand. This is a significant change from August 5 and August 6, when traders were willing to pay a 4% premium to protect their positions and take advantage after the price crash. In short, Bitcoin’s path back to $57,000 support is challenging, as it reflects the confidence in China’s BTC derivatives indicators and the declining demand for stablecoins.
This article does not contain any investment advice or recommendations. All investment and trading moves involve risk, and readers should conduct their own research when making decisions.