Bitcoin on-chain analysis, an overview of 3/18/22–3/25/22
- Major resistance for BTC remains 46k-47k
- Open interest build up over the last 24 hours
- Spot premium over perps continues
- 3M spot/futures basis is in backwardation in real terms
- On-chain accumulation continues
- US trading hours increasingly trading at a premium
On-Chain Analytics and Derivatives
Let’s dive into some on-chain and derivatives developments from this week.
First of all, from a broad price structure standpoint, BTC is pressing towards resistance amidst the consolidation we’ve been following for over 2 months now.
The most important level for BTC to reclaim remains 46–47K.
Reclaim this and momentum probably steps back in. For short-term traders, the R/R doesn’t seem great too long, if not long already, just below major resistance.
There is a confluence of this with on-chain as well, with STH cost basis sitting at $46,200.
There is always a possibility that these asks are just spoofs suppressing price to fill bags, but Bifinex bid/ask walls have a higher hit rate than most other venues outright.
Bulls want to see either the wall get pulled with minimal filling, or see a full fill; know this sounds a bit strange, but if a wall is fully filled that means that the effort in the market (active orders) is outweighing the absorption (limit orders).
Partial fill of the bids say 60–70% and then price reversal is not ideal for bulls, because it shows effort could not outpace absorption.
We’ve seen a pretty big spike in open interest compared to Bitcoin’s market cap over the last 24 hours.
I tend to think these aren’t aggressive longs because of the next two charts we’ll look at below (spot premium and backwardation), but one way to gauge this is simply by watching the reaction of open interest with a price; in this case the reaction to the 46k area.
If BTC wicks through 46k and open interest don’t budge or rises, that’s not a great sign.
If this open interest build-up is indeed shorts, we want to see OI starts to decline in “squeezy” fashion on the push above to feel fully confident this build-up has been shorted.
Spot premium persists, this is one of the longest spot premia over perps regimes in Bitcoin’s trading history.
Now on to the on-chain side of things.
First up we have the LTH Accumulation ratio, comparing the annualized rate of LTH supply growth to Bitcoin’s supply issuance.
This is showing the most deflationary reading in Bitcoin’s trading history, in other words, long-term holders are locking up supply at a pace that is outpacing the amount of BTC being introduced into circulation every day.
Another way to look at this, but instead by the actual historical spending behaviour of entities on-chain; illiquid supply continues to rise.
Supply continues to move to entities who sell less than 25% of the coins that they take in. This is very different from the signature during 2018.
Of the on-chain accumulation, it actually appears that some of this has come from smaller entities (orange line); with whales holdings in a broader downtrend despite a spike over the last few days.
Another hint as to the backdrop of Bitcoin market behaviour, this looks at the premium that Bitcoin price trades at amongst different global trading hours.
What we can see in the chart is that over the last 10 months (as of today) the United States trading hours have been trading increasingly at a premium.