Bitcoin Bullish Structure Weakens As Inter-Exchange Liquidity Touches Red Zone – Details

Overview

The Bitcoin market is currently facing a potential trend reversal after weeks of price correction. Recent on-chain data indicates a weakening bullish structure, raising concerns about the sustainability of recent price recoveries.

Recent Developments in the Bitcoin Market

Bitcoin has seen a notable rebound following a significant correction from its all-time high. After experiencing a 36.5% drop, the market leader managed to recover from a price of $80,000 to approximately $94,000 over a span of three weeks. Despite this recovery, data from the Bitcoin Inter-Exchange Flow Pulse (IFP) raises alarms about the longevity of this upward momentum.

The Bitcoin IFP measures the net movement of Bitcoin between different exchanges over time. According to popular analytics page Arab Chain, the IFP has been trending downward, having recently dipped below its 90-day moving average (MA). This downward trend suggests a reduction in market participation, particularly in terms of bullish flows between exchanges.

The IFP is currently in the red zone, a condition that historically precedes periods of market correction or indicates weak structural momentum. This situation is critical for Bitcoin as it reflects a decrease in exchange flows that have historically supported price rallies in previous market phases.

Furthermore, Arab Chain highlights that, despite the current price being relatively high compared to historical levels during similar situations, the price and inflows appear to be moving independently of one another. This disconnection is often a precursor to prolonged price consolidation or a significant phase of sideways movement until inter-exchange flows can regain strength.

While the Bitcoin bullish structure has not collapsed into a bearish state, the developments indicated by the IFP suggest that sustained upward movement may be unlikely in the short term. Market liquidity changes could make the price more sensitive, increasing the potential for another correction.

As of the latest update, Bitcoin is trading at a price reflecting a slight decline over the past 24 hours, while daily trading volume has seen a significant increase. Analysts suggest that for a continuous price rebound to occur, the IFP must reclaim its 90-day MA, indicating a resurgence in bullish exchange flows.

From Author

The current state of the Bitcoin market reveals a complex interplay between price movement and market liquidity. While recent price recoveries may seem promising, the underlying indicators suggest caution. The relationship between Bitcoin’s price and inter-exchange flows is crucial in determining the market’s next steps. Observing these trends will be essential for investors and traders looking to navigate the evolving landscape.

Impact on the Crypto Market

• The weakening bullish structure could lead to increased volatility in Bitcoin prices.
• A sustained downturn in inter-exchange flows may signal a broader market correction.
• Investors might exercise caution, impacting trading volumes and market sentiment.
• A potential disconnection between price and inflows could result in prolonged sideways movement.
• The need for the IFP to reclaim its 90-day MA highlights the importance of inter-exchange dynamics in driving market trends.