Bitcoin experienced a significant decline during the Asian market session, dropping to $91,800 from $95,300, which represents a 3.7% decrease. This pullback has resulted in the liquidation of approximately $233 million in long positions within a 24-hour timeframe, shaking out leveraged traders while maintaining the overall market structure.
The rapid decline in price has led to a notable cooling of market sentiment, with Axel Adler Jr. reporting that the Advanced Sentiment Index for Bitcoin plummeted to 44.9% from a high of 80%. This index, which combines metrics such as volume-weighted average price (VWAP), net taker volume, open interest, and volume delta, had previously reached extreme bullish levels earlier in the week, coinciding with a local peak around $97,000.
The drop below the neutral 50% mark indicates a shift towards weaker risk conditions, according to Adler. For price stabilization to occur, Bitcoin would need to recover above the 50% sentiment threshold. A further decrease towards the 20% zone could increase the likelihood of a more significant market correction.
Moreover, Bitcoin”s open interest has reverted to its yearly opening levels near $28 billion. This development suggests that the recent downturn primarily resulted in the unwinding of leveraged positions rather than the initiation of new short positions. The cumulative volume delta in the futures market remains slightly elevated compared to open interest, while the cumulative volume delta in the spot market has remained stable, indicating limited selling pressure driven by spot transactions.
From a technical perspective, Bitcoin continues to demonstrate a pattern of higher highs and higher lows on its daily chart. The price range between $92,000 and $93,000 corresponds to a daily order block demand zone, aligning with a retest of the rolling monthly VWAP support. This area is viewed as a potential higher-low point, setting the stage for another upward move towards $100,000.
Data from Hyblock Capital shows that around $250 million in net long positions were established near the $92,000 mark over the past day, indicating demand for buying the dip rather than signs of capitulation. As U.S. equity markets remain closed for the day, clearer directional trends may develop on Tuesday, potentially enabling bullish traders to regain control of the market.
This article does not contain investment advice or recommendations. Every investment and trading decision carries inherent risks, and readers should conduct their own research before making any financial choices.
