Daily chart analysis reveals that Bitcoin (BTC) has been oscillating within a tight price corridor since August 29. It’s encountering significant selling pressure around $111,961, while finding a base of support at $107,557.
Despite this period of price stagnation, a segment of Bitcoin investors remains confident, actively increasing their holdings of the leading cryptocurrency.
Bitcoin Futures Traders Increase Positions While Price Consolidates
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The rising Estimated Leverage Ratio (ELR) for Bitcoin across various cryptocurrency exchanges suggests a growing sense of optimism among investors and a higher tolerance for risk, even as the price movement remains subdued.
Data from CryptoQuant shows that Bitcoin’s ELR has been steadily increasing since August 12, subsequent to Bitcoin reaching a record high of $123,731 before starting a sustained decline.
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It’s worth noting that while Bitcoin’s price has struggled to regain upward movement, the amount of leverage used in the derivatives market has been increasing. This indicates that some traders are not discouraged by short-term downturns and are instead reinforcing their positions in Bitcoin.
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An asset’s ELR measures the typical amount of leverage traders employ when trading on a crypto platform. It is found by taking the asset’s open interest and dividing it by the exchange’s reserves for that particular cryptocurrency. When ELR decreases, it suggests investors are becoming more wary of the digital asset’s near-term potential and avoiding high-risk, high-leverage strategies.
However, the opposite is true for Bitcoin. A rising ELR, even during a period of price stability, points to traders remaining active in the market and embracing higher levels of risk.
Instead of reducing exposure during this consolidation phase, Bitcoin traders are increasing their leveraged positions, expressing a belief that the current market pause is temporary.
Why Bitcoin’s Bull Run Could Still Be in its Early Stages
In a recently published analysis, CryptoQuant analyst PelinayPA suggests that the market might be experiencing a “mid-bull” phase, which often sees accelerated price movements.
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This analysis relies on the coin’s Net Unrealized Profit/Loss (NUPL) metric, which PelinayPA indicates is at 0.52. The NUPL is used to determine whether the market is largely in a state of profit or loss, helping to identify different phases within the market cycle.
Looking back, NUPL values between 0.7 and 0.8 have coincided with peaks in the Bitcoin market during 2013, 2017, and 2021.
“Currently, the market appears to be in a ‘faith & optimism’ stage, which often signifies the middle phase of a bull market. Based on past trends, Bitcoin has a good chance of reaching the $120,000 – $150,000 range in the upcoming phases,” PelinayPA stated.
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This indicates that although Bitcoin hasn’t yet reached its historic high points, it is already moving into a phase where upward momentum is starting to regain strength.
Which Side Will Prevail: Bulls or Bears?
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With the leading cryptocurrency positioned for a possible short-term upturn, a push above the resistance level at $111,961 is a real possibility. Should this happen, Bitcoin could potentially advance to $115,892.
Alternatively, if buying interest weakens, Bitcoin may stay within the current range or even descend below the $107,557 support level.