Bitcoin (BTC) has not seen a “massive futures margin call” as BTC price fell to a two-month low, according to the analysis.
in Thread of X (formerly Twitter) On May 2, Checkmate, lead on-chain analyst at blockchain data company Glassnode, revealed a major change in the Bitcoin bull market.
Analysis: Derivatives Not “Dominating” in BTC Price Selling
Bitcoin’s rise to $56,500 on May 1 may have shocked some, but in a broader sense, this bull market decline appears to be cathartic for market health.
As Checkmate shows, gradual “deleveraging” across Bitcoin futures has been ongoing since Bitcoin’s latest all-time high in mid-March. He claims this is putting an end to “bull market excess.”
“Those of you in the Bitcoin bull market of 2021 may remember the massive derivatives-led deleveraging event,” one post read in part.
“Do you see derivatives plummeting today? “I don’t think so.”
The attached chart compares Bitcoin’s decline to $58,000 during the first quarter of 2021.
Checkmate cited continued uniform funding rates across derivatives as a factor that clearly differentiates the current market from the market three years ago.
“Funding rates have cooled gradually rather than violently, which is very healthy. This means we did not see a large futures margin call yesterday,” he wrote.
This has turned our attention to other sources of recent BTC price declines. This source has not recovered well beyond its lows at the time of this writing.
“There were also two statistically significant deleveraging events in the futures market prior to this sell-off,” the thread noted, along with a chart of the seven-day change in Bitcoin futures open interest levels.
“We reached a couple of hot spots during the $73,000 ATH rally, but they cooled off quickly. Again, derivatives do not appear to be the dominant factor in this Bitcoin sell-off.”
Bitcoin falls below ETF cost basis
Regarding selling, the U.S. spot Bitcoin exchange-traded fund (ETF) recorded a net outflow of more than $500 million on May 1.
Related: Is Bitcoin Price Rebounding to 57K? Here’s why these levels are important:
Investors’ merciless reaction to BTC price performance also saw BlackRock’s iShares Bitcoin Trust (IBIT) lose nearly $40 million, its worst day on record.
Data from sources including UK-based investment firm Farside showed a similar story for all ETF products, with negative flows across the board.
The largest outflow came from Fidelity Investments’ Fidelity Wise Origin Bitcoin Fund (FBTC), with $191 million.
Popular trader Mikybull Crypto said, “Bitcoin price path creating more panic across the market and then creating a bottom for the continuation of the rise.” assert This is part of the X response.
“IBIT experienced outflows of $36.9 million for the first time since ETF approval as current prices are below cost basis. In every BTC bull cycle, good news always signals the highs and bad news signals the lows.”
The post revealed a major reset in cryptocurrency market sentiment, with the Crypto Fear and Greed Index returning to “neutral” territory at 43/100, its lowest since September of last year.
This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.