Bitcoin has experienced significant volatility in recent weeks, according to a report by CryptoQuant. After reaching a peak of over $30,000, the cryptocurrency’s price fell by 8% last week, indicating that the market had entered into an overheated bull phase. However, the market has now exited this phase and entered into the bull stage, albeit still at high levels.
The report suggests that the decline in Bitcoin’s price was due to profit-taking by traders in the perpetual futures markets. Open interest fell as prices fell, but traders are once again opening long positions. Additionally, future market traders took profits following a rally in Ethereum that pushed its prices to levels above $2,000. This was fueled by the successful activation of the Shanghai upgrade on April 12.
According to the report, funding rates are now indicating a neutral attitude among traders, which is a shift from the bullish sentiment seen in recent weeks. Despite this, the spending activity of whales remains high, with as much as 40% of total coins being spent as prices approached the $30K zone. Typically, price rallies coincide with lower whale spending activity of around 20% of total coins being moved.
The report also reveals that long-term holders of Bitcoin have been spending coins at the highest profit margin since May 2022, when Bitcoin was trading at around $30,000. Conversely, short-term holders are still spending at a small profit. Typically, prices bottom out after a correction when short-term holders spend their coins at a 4% loss, as seen by the short-term holder SOPR falling to 0.96. The short-term cost basis, or the realized price, currently stands at $24,000, which is generally a good indicator of support for prices when in a bull market.
Overall, the report suggests that Bitcoin is experiencing a period of volatility, with the market entering the bull stage after exiting the overheated bull phase. Traders are opening long positions once again, and the spending activity of whales remains high, indicating that there is still a significant amount of interest in the cryptocurrency. However, funding rates are now indicating a neutral attitude among traders, suggesting that there may be some uncertainty in the market in the coming weeks.
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