Bitcoin Spot-Perpetual Gap Points to Continued Selling Pressure - Analyst

2024-08-17 03:00:34

The month of August has been largely uneventful for Bitcoin so far, with the premier cryptocurrency having struggled to reclaim the $65,000 price mark since August 2. Currently, Bitcoin is slightly below $60,000 as the bulls and bears seek to grab control in what has been a range-bound market for the past week. Interestingly, CryptoQuant analyst XBTManager has shared revelations that indicate the BTC market is likely to maintain its current bearish form for the time being.

Wide Spot-Perpetual Gap Spells Trouble For Bitcoin

On August 16, XBTManager reported that Bitcoin’s Spot-Perpetual Price Gap, as tracked on the Binance exchange, is continually in a negative form indicating that the asset may record more price loss due to a sustained selling pressure

For context, a Spot-Perpetual Price gap occurs when there is a difference between the valuation of Bitcoin on the spot market which deals with the asset’s actual price, and on the perpetual markets which allow traders to deal in speculations of the Bitcoin’s future price.

When the perpetual price is lower than the spot price as in the current case of Bitcoin, it indicates traders are massively offloading the asset in the perpetual futures market as they believe there could be an incoming price fall

Expectedly, XBTManager predicts this negative spot-perpetual gap will translate into a heightened selling pressure in the spot market as several traders will look to sell their assets and buy in the perpetual market thus taking advantage of the arbitrage to gain some profit

In the advent of such a reaction, deep liquidation hunts might occur i.e. where a large number of leverage positions are forcefully closed down, leading to a larger negative Spot-Perpetual Gap, and increased selling activity

However, XBTManager has noted a potential positive for Bitcoin in this uncanny situation. The analyst states that high selling pressure will likely result in an accumulation of multiple short portions on Bitcoin Therefore, the instance of a sudden price gain might force these positions to close leading to some significant buying activity that could reduce the current negative Spot-Perpetual Price gap.

BTC Price Overview

At the time of writing, Bitcoin trades at $58,981 with a 2.28% gain in the past day. However, the token’s daily trading volume is down by 16.37% and is valued at $29.5 billion. On larger time frames, Bitcoin also remains in the red zone with a loss of 2.92% and 8.76% over the last seven and thirty days respectively

BTC trading at $59,141 on the daily chart | Source: BTCUSDT chart on Tradingview.com

BTC1,44%

This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.