- Bitcoin's price dropped below $60K as investors began taking profits from last week's rally.
- CryptoQuant's report states that Bitcoin has seen increased demand in the US, characterized by a high Coinbase premium.
- CCData shows an increase in BTC options open interest as investors are eyeing the $100K price.
Bitcoin (BTC) dived below $60K on Friday following a brief profit taking from investors, per CryptoQuant report. Meanwhile, CCData suggests that traders are optimistic of a bullish movement, as reflected in an uptick in BTC options open interest (OI).
Bitcoin declines as options open interest rises
Bitcoin fell under $60K after a long week of investors taking profits and currently trades around $58,800. Investors began taking profits after a brief rally last Saturday caused by a renewed possibility of the Federal Reserve (Fed) cutting interest rates pushed Bitcoin above $64K.
Despite the profit-taking, Bitcoin's realized profits amounted to only $536 million, far lower than the $10 billion and $9 billion recorded on May 27 and March 12, respectively, noted CryptoQuant in its latest weekly crypto report. This indicates that the market may not have yet topped for the cycle.
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BTC Realized Profits
While the profit-taking was minor, it saw Bitcoin stretch its weekly losses to 6.8% on Friday, per Coingecko data.
Another major cause of the price decline seems to be sustained lows in BTC demand growth, which has plunged considerably since April. Bitcoin's 30-day demand growth declined from a three-year high of 496K BTC in early April to -36K BTC in the past month.
However, recent data suggests that Bitcoin might be seeing new demand from US investors, as the Coinbase exchange premium hit a one-month high of 0.11 during the week, noted CryptoQuant analysts.
Additionally, CCData suggests that Bitcoin traders are highly optimistic about a bullish trend prevailing, as reflected by an uptick in options open interest (OI). The data indicated that BTC options open interests have risen by 32.5% with a low put/call ratio since the beginning of the month. Put/call ratio is the total number calls vs puts in asset’s options market.
BTC Options Open Interest
The data further suggests that investors are eyeing a $100K price level for Bitcoin, as evidenced by concentrated call options around this price level. The sudden sentiment change can be traced to traders' anticipation of the Fed cutting rates in September, as Bitcoin's price tends to perform better during a low interest rate environment.
Bitcoin, altcoins, stablecoins FAQs
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
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