Bitcoin has recently seen mixed market movements, with analysts closely guarded Watching On-chain data to understand the short-term path of the leading cryptocurrency.
On-chain metrics indicate a notable shift in exchange activity, with Tether (USDT) seeing significant outflows while Bitcoin (BTC) inflows to exchanges remain elevated. This trend indicates a potential “imbalance” in market dynamics, as selling pressure could lead to further price corrections in the short term.
Immediate market trends and selling pressure signal a potential pullback
According to data shared by CryptoQuant analyst Onatt, more than 15,000 BTC were observed moving to exchanges, a metric usually associated with an increased likelihood of sell-offs. At the same time, Tether outflows indicate reduced liquidity within these exchanges.
Tether outflows and Bitcoin inflows indicate short-term weakness
“Large amounts of Tether (USDT) are exiting exchanges, and a large influx of Bitcoin (BTC) (>15K) has been observed entering exchanges.” – By @tutunculeronat
connection https://t.co/NFCLi7EpiI pic.twitter.com/6lUyTiEdNi
— CryptoQuant.com (@cryptoquant_com) December 24, 2024
Historically, such moves have been associated with short-term price declines, as traders and institutional investors reposition their portfolios amid market volatility.
However, Onat noted that while these indicators point to short-term downside risks, there appears to be no significant macroeconomic catalyst to drive a long-term downward trend. The analyst specifically wrote:
This combination of factors may indicate the potential for a further short-term decline in the price of Bitcoin. However, from a macroeconomic perspective, there does not appear to be a catalyst that would necessitate a long-term downward trend beyond this short-term correction.
Key indicators are pointing to mixed signals in the Bitcoin market
TraderOasis, another analyst, highlighted additional metrics that influence Bitcoin price behavior. One key observation focused on the Coinbase Premium indicator, which failed to follow Bitcoin’s upward movement during the recent price surge. Oasis noted:
As a result, the price fell. We are now in negative territory. I expect a break in the market to continue the rise.
Notably, this disconnect indicates a lack of strong buying activity from US-based investors, which is often considered an important driver of Bitcoin’s upward momentum. The analyst also noted that funding rates are starting to decline while open interest levels are rising.
Lower funding rates coupled with higher open interest typically indicate that traders are opening more short positions. This pattern indicates bearish sentiment in the derivatives market, as traders expect a continuation of the downtrend, or at best, a period of sideways movement.
Additionally, the combination of declining funding rates and increasing open interest suggests that the market could remain in a consolidation phase for a while. The merchant wrote:
I think the price will move sideways due to Christmas week. Then the distribution movement will begin.
Featured image created with DALL-E, chart from TradingView