Decipher the reasons behind Bitcoins [BTC] recent price correction

• BTC’s open interest fell and selling pressure appeared dominant across the Futures market
• A few metrics supported the bulls, but the rest suggested otherwise

Bitcoin [BTC] fell victim to a price correction in the last 24 hours as the price fell by more than 1% on the charts. At press time, it was still trading above the $28,000 level with a market capitalization of over $542 billion.

An April 5 CryptoQuant analysis outlined the reason behind this decline in a recent blog post.

Read Bitcoins [BTC] Price prediction 2023-24

The reason behind BTC’s price decline

Crazzyblockk, a writer and analyst at CryptoQuant, mentioned in his analysis as a reliable way to analyze BTC‘s price action is with the profits earned by short-term owners.

According to the analysis, the value in short-term holders’ pockets typically increases near the price bottom. And the need for Bitcoin’s sustained price growth depends on how these players trade and how profitable they are. Therefore, a look at the behavior of short position traders can help gauge the reason behind BTC’s recent price decline.

Liquidations on the way up!

CryptoQuants data revealed that selling pressure was dominant across the derivatives market, which was evident from BTC’s bid/ask ratio. More than 15 million long positions were liquidated in the last 24 hours, indicating higher selling pressure.

The increased liquidations in the market could also have contributed to the pressure Bitcoin‘s price down in the last 24 hours. Additionally, the trend reversal was also supported by reduced open interest, which was bearish for the king of cryptos.

Source: CryptoQuant

Is a major doom inevitable?

Although the current market looks troubling BTC, things may soon turn in crypto’s favor. For example, BTC’s foreign exchange reserves have dropped – A sign of low selling pressure. The total number of active wallets used to send and receive coins has also increased, which is mostly a positive sign. Here it is also interesting to note that a whale received BTC worth 500 million dollarswhich reflects high confidence in the royal coin.

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A similar trend of accumulation is also evident from a look at Santiment’s chart. Bitcoin’s supply on exchanges fell over the past seven days while off-exchange supply rose sharply. This is a typical bull signal – a sign of investor confidence in BTC.

Source: Sentiment

Caution is advised

Although a few of the calculations were in the bull’s favor, nothing can be said with absolute certainty.

For example, BTCThe MVRV ratio fell in the last week which was bearish. Moreover, weighted sentiment also drifted to the downside, indicating lower confidence among Bitcoin investors.

Source: Sentiment