According to Bitfinex, liquidity was lower due to the summer holidays, which resulted in fewer active institutional participants trading in the market.
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“Selling pressure has intensified as fund managers head out for summer vacations, which has led to very illiquid markets,” Bitfinex analysts told The Block.
The analysts added that the data shows continued profit taking among long-term Bitcoin holders. “Even those who have held Bitcoin for 3-4 years are now seeing a large portion of the long-term holders take a risk-off stance and exit their spot positions. This could be due to a glut of supply from German law enforcement, the Mt. Gox sell-off, or a general lack of confidence in the strength of the market,” the analysts added.
According to Ryan Lee, senior analyst at Bitget, Bitcoin’s recent market underperformance is largely due to the transfer of confiscated Bitcoin by the German government to various cryptocurrency exchanges, as well as transfers from Mt. Gox Bitcoin cold wallets to exchanges such as Bitbank, “making the market anticipate further potential selling pressure.”
Lee also pointed to Bitcoin’s current price levels, saying that the price has fallen below the closing price of some mining rigs, which could change the buying and selling behavior of Bitcoin miners. “Miners are now more inclined to hold Bitcoin rather than sell it, which reduces the potential selling pressure on miners,” he said.
Bitcoin put-call ratio shows growing bearish sentiment
According to data from Greek.live, 18,000 Bitcoin options are expected to expire on Friday’s weekly options expiry with a higher put-call ratio of 0.65, suggesting that more and more positions are betting on further downside movement. However, the majority of open interest is still comprised of calls.
Bitcoin’s price has continued to fall throughout the past week, falling below $56,000 in early Friday morning trading. According to The Block’s price page, Bitcoin’s price has fallen about 3% over the past 24 hours, currently sitting at $55,500 as of 7:46 a.m. ET.
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