Key points:
Bitcoin’s sell-off intensified, but data shows spot buyers increasing their allocation size.
Liquidation heatmap data suggests the sell-off could extend to $107,000.
Bitcoin (BTC) fell to a two-week low of $108,865 on Thursday, and while an assortment of entities have shown interest in buying the range lows this week, selling during the Asia trading session has chipped away at the gains accrued through each rebound rally in the US session.
Throughout the past week, traders have stepped in to buy intra-day lows, but liquidation heatmap data from Hyblock shows a liquidation cluster composed of leveraged long positions at risk of absorption from $111,000 to $107,000.
In addition to the downside liquidation risk, activity in perpetual futures markets continues to drive Bitcoin’s day-to-day price action, and heavy selling from the institutional investor-sized cohorts (1,000 to 10 million) continues to overwhelm the spot purchasing seen among retail-investor-sized (100 to 1,000) orders.
Despite Bitcoin nearly falling below $110,000, the notable development of the day is the aggregate spot orderbook bid-ask ratio tilting back toward buyers. The metric measures “the relationship between the number of buy orders (bids) and sell orders (asks) in an order book,” and the ratio ranges between -1 and 1, with zero showing an equal number of buy and sell orders in the order book.
According to Hyblock,
“A bid/ask ratio that is greater than 0 indicates that there are more buy orders than sell orders in the order book, which could suggest that there is greater demand for the asset at the current price level.”
Related: Bitcoin faces ‘imminent’ $110K retest as US dollar hits three-week high
Setting the metric to 10% depth at only spot exchanges shows buyers beginning to step in as the price fell to $110,553 from $111,200. Proof aligned with this buying is visible in the anchored four-hour cumulative volume delta, where a surge in buy volume is seen (yellow arrows).
While the spot volumes pale in comparison to the buying and selling seen across perpetual futures markets, the re-emergence of a bid-ask ratio tilted toward bulls is a first since it was last seen Sept. 5 to Sept. 7, right before BTC rallied from $107,500 to its recent price top at $118,200.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
