Reduced institutional trading during summer vacations has led to lower liquidity in the bitcoin market, according to Bitfinex analysts.
Fewer institutional participants are actively trading in the market due to summer vacations, resulting in decreased liquidity, according to Bitfinex.
“Bitcoin sell pressure has been exacerbated by fund managers being away on vacation for the summer, making the market very illiquid,” Bitfinex analysts told The Block.
The analysts added that data shows profit-taking is continuing from long-term bitcoin holders. “Even those who have held bitcoin for a period of 3-4 years, we see long-term holder cohorts continuing to remain risk-off for now and exiting spot positions. This is either because of the supply overhang from German law enforcement, Mt. Gox sales, or a general lack of conviction in the market’s strength,” they added.
According to Bitget chief analyst Ryan Lee, bitcoin’s recent underperformance is primarily due to the German government’s transfers of seized bitcoin to multiple cryptocurrency exchanges and the Mt. Gox bitcoin cold wallet making transfers to exchanges like Bitbank, “prompting the market to further anticipate potential selling pressure.”
Lee also pointed to bitcoin’s current price levels, stating that the price has fallen below the shutdown price for some mining rigs, which may change the buying and selling behavior of bitcoin miners. “Miners are now more inclined to hold their bitcoin rather than sell it, reducing the potential selling pressure from miners,” he said.
Bitcoin put-call ratio shows growing bearish sentiment According to data from Greek.live, Friday’s weekly options expiry will see 18,000 bitcoin options expire with a more elevated put-call ratio of 0.65, suggesting a growing number of positions are betting on further downside movement. However, the majority of open interest still comprises calls.
Bitcoin’s price has continued to decline over the past week, sliding below the $56,000 mark during early morning trading on Friday. Its price decreased by around 3% in the past 24 hours, currently sitting at $55,500 at 7:46 a.m. ET, according to The Block’s price page.