Bitcoin price decline as on-chain data shows negative bias

• U.S. spot Bitcoin ETFs recorded outflows of $127.1 million on Tuesday.
• Nasdaq files with the SEC to list and trade Bitcoin Index Options.
• On-chain data shows long liquidations and a higher percentage of shorts, signaling a continuation of the bearish trend.

 

Bitcoin (BTC) edges up slightly on Wednesday after dropping by 7.5% at the start of the week following the markets’ broad risk-off tone. Nasdaq has filed with the U.S. Securities and Exchange Commission (SEC) to list and trade Nasdaq Bitcoin Index Options (XBTX), a positive development for BTC, but on-chain metrics project a negative outlook as evidenced by a higher percentage of shorts, while US spot Bitcoin ETFs posted outflows on Tuesday.

 

Daily digest market movers: Nasdaq seeks SEC approval to launch Bitcoin Index Options

• Nasdaq (NDAQ) announced on Tuesday that it has filed with the US Securities and Exchange Commission (SEC) to list and trade Nasdaq Bitcoin Index Options (XBTX). Nasdaq, a global technology company specializing in exchange and financial technology services, has partnered with C.F. Benchmarks, a leading regulated cryptocurrency index provider, to enhance the integration of digital assets into traditional financial markets.

The Nasdaq Bitcoin Index Options are designed to help institutional and retail investors manage their positions and hedge investments in the cryptocurrency markets. Subject to regulatory approval, these options will track Bitcoin prices using the CME CF Bitcoin Real-Time Index (BRTI). The product enhances market maturity and liquidity by offering European-style exercise and cash settlement.

• On Tuesday, Coinglass's U.S. spot Bitcoin ETFs data shows an outflow of $127.1 million. This was the first day of outflows after eight days of inflows, the longest streak of gains since mid-July. As a result, BTC declined by 5.4% on Tuesday and, if this trend continues, Bitcoin price could decline further as ETFs' net flow data is crucial for understanding market dynamics and investor sentiment. The combined Bitcoin reserves held by the 11 U.S. spot Bitcoin ETFs stand at $46.73 billion.

Bitcoin Spot ETF Net Inflow chart

• Mi Primer Bitcoin, an educational Bitcoin nonprofit organization founded in El Salvador, is at risk of running out of funds, according to a Twitter post by its founder John Dennehy. El Salvador is the first country to have adopted Bitcoin as legal tender and the country’s government has been gradually increasing its Bitcoin holdings.

"We are in danger of running out of funding before some longer-term funding kicks in at the end of the year. If nothing changes, we will run out of money in September," he said.

"We've been working tirelessly to cultivate funding sources that best allow us to remain truly independent and ensure long-term sustainability, but we need a bridge for a couple of months to get there," Dennehy concluded.

• According to DL News, the French authorities' arrest of Telegram founder Pavel Durov last Saturday may have been bad news for the crypto community.

"For years, crypto founders, devs, investors, and all manner of users have flocked to the platform and formed groups to communicate, collaborate, and help grow their ventures. Durov's arrest suggests European authorities are intensifying their push to hold software developers responsible for the activity that takes place on their platforms," DL said.

The arrest of Durov may have created FUD (Fear, Uncertainty, Doubt) among the crypto community, potentially contributing to the recent crypto market sell-off and the decline in Bitcoin's price.

Additionally, famous personalities in the crypto space have raised concerns about Durov's arrest. Among them is Paolo Ardoino, CEO of Tether, one of the largest companies in the cryptocurrency industry, and Tesla CEO Elon Musk, who posted the hashtag #FreePavel on his social media platform X. 

• Lookonchain data shows that on Tuesday, as Bitcoin's price declined more than 7%, 87,405 traders were liquidated for $318.46 million. Among them, a whale was liquidated for $12.67 million on an ETH/BTC long position, and another one was liquidated for $12.6M on a $BTC long position. If BTC declines further, more traders could be wiped out of the market.

• Coinglass's long-to-short ratio on exchanges shows BTC's long-to-short ratio at 52.18%. This ratio reflects bearish sentiment in the market, as there is a higher percentage of shorts than longs. This suggests that more traders anticipate the decline in Bitcoin's price.

Bitcoin  long-to-short ratio chart

 

Technical analysis: BTC is poised for down leg 

Bitcoin price was rejected around the daily resistance level at $65,379 on Sunday, declining by 7.5% in the next two days. On Wednesday, it recovers slightly by 1% at $60,071 at the time of writing.

If BTC continues to decline and closes below the $58,783 level, it could decline further by 4.5% to retest its daily support at $56,002.

 

The Relative Strength Index (RSI) on the daily chart has slipped below its neutral level of 50, and the Awesome Oscillator (AO) is on its way to close below its neutral level of zero. When both indicators trade below their neutral levels, it suggests a weak momentum and an impending bearish trend.

BTC/USDT daily chart

However, if Bitcoin's price finds support around $58,783 and closes above it, the bearish thesis will be invalidated, and BTC could rally 11% to revisit its daily resistance level at $65,379.

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