Bitcoin’s [BTC] rally stalled at $79.4K on Wednesday, 22 April. There were, and still are, fears that a wave of profit-taking could lead to a sizeable price correction.
At the same time, investor interest in Bitcoin has been rising, as the Coinbase Premium showed. Crypto analyst Darkfost used the volume-weighted version to reduce noise and give weightage to the largest volumes when calculating the CP gap.
The analyst also assumed that Binance is mainly a reflector of retail interest, while Coinbase Advanced sees professional and institutional users. As such, the positive volume-weighted premium indicated that the recent price gains were supported by steady demand.
The difficulty BTC faces in breaching $79K
In a previous report, AMBCrypto explored why the $80K round-number resistance was a big test for the buyers. The short-term whales’ realized price, or cost basis for Bitcoin, was in the $76k-$80k region.
This finding, along with the long-term holder supply underwater, highlighted why it would be difficult for bulls to get a sustained uptrend going.
BTC has been testing the True Market Mean Price, asserted Joao Wedson in a post on X. This meant that the price is at a critical resistance level – A key inflection point. The bulls might need time to force their way past this area.
This might explain why the market has been increasingly bearishly positioned as Bitcoin’s price rallied higher. And yet, historically, negative funding rate extremes have been met with sustained price gains, and not a slump in the trend.
This may be due to forced short liquidations, which are closed as market buy orders that drive derivatives prices higher in a self-reinforcing loop. These conditions describe a short squeeze, but by itself, a short squeeze can’t set up a sustained uptrend.
Structural repair, not market recovery
Analyst Axel Adler Jr showed that based on the short-term holder cost basis, the market has not regained a bullish structure yet. The metric signals if the price is at a premium or discount compared to the STH cost basis.
Selling pressure from heavily underwater short-term holders has eased considerably since February, but the transition to a bullish structure has not come about. The short-term holder’s cost basis has declined to $83K, but the market price is still a short distance away.
According to the analyst, this discount reading means it is better to read the current uptrend as a structural repair and view the market under a long-term bearish lens, instead of betting on a bullish trend shift.
Final Summary
- Disbelief in BTC’s rally to $79.4K has led to a hike in Open Interest and a high willingness to short the leading crypto.
- The $79K-level is the “true market mean price,” and bulls could have a difficult time breaching this resistance level.