Bitcoin Has Moved to ‘Stranger Hands’ But The Market Direction Remains Uncertain

Bitcoin continues its choppiness after the drawdown of 54%.

While the cryptocurrency briefly saw $43k after falling to $30,000, It was hovering around $41k but has since dropped nearly 8% in the last hour to $37.5k on the news that Hong Kong is considering a retail ban of crypto trading.

The good thing is strong hands that were waiting on the sidelines bought the dip.

As we reported, the open interest more than halved during the Black Wednesday sell-off, much like March 2020, which means the market had yet another significant transfer of coins from weak hands to strong hands.

The price is already back to the level before the sell-off began because “they all got bought up by spot buyers with real cash instead of leverage, which are stronger hands. These coins have now transferred from short term leverage speculators to real cash buyers,” said CL from eGirl Capital.

Still, trader and economist Alex Kruger is not seeing a V-reversal for the prices. According to him, setup is bullish for bitcoin, but top and bottom are in for months ahead.

This price action has market participants expecting a 2013 -like scenario when Bitcoin double-pumped or a supercycle in which the next round of bull run doesn’t start until next year. While it’s to be seen which kind of cycle we will experience this time, ranging in the short-term seems the most likely outcome.

In the meantime, funding rates on perpetual contracts have normalized as they went down to fall into negative territory.

Still, “funding rates for perps are anything but normal with a significant divergence between exchanges,” says Delphi Digital. In healthy markets, they should converge quite closely.

“Until there’s some semblance of stability on perp funding rates, the market’s future direction is still uncertain.”

While last week saw record outflows, this week, people have jumped on the chance to scoop their favorite coins. Hunter Horsley, CEO of Bitwise himself, stated, “Bitwise has had more inflows than outflows every day this week.”

Financial institutions also continue to get involved. While Saxo markets and Wells Fargo are planning to offer their clients crypto services, Suncrest Bank is in discussion with NYDIG to allow its customers to buy, hold, and sell BTC.

“The pandemic has had an impact on the acceptance and migration to digital,” including customers’ interest in investing in Bitcoin, said Ciaran McMullan, CEO of Suncrest, the bank with $1.3 billion in assets.

However, “there is a lot more work to be done on the regulatory side,” he added.

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