Bitcoin Rally Faces $100M Sell-Off Threat, Data Shows

Key Takeaway

• Bitcoin's rally may slow due to a $100 million order-book imbalance, indicating increased profit-taking.
• The ask side liquidity has been higher since late January, suggesting sellers are active as Bitcoin nears its all-time high.
• Despite the sell-off signs, net buying pressure remains strong on major exchanges, with Binance's CVD up by nearly $1 billion.

Bitcoin Price Rally and Profit-Taking

Bitcoin's recent price rally to record highs above $69,000 has triggered profit-taking among holders, leading to a temporary resistance in the market. The imbalance between potential sellers and buyers in bitcoin's aggregated order book across 33 centralized exchanges has widened to nearly $100 million, about five times its usual value. This indicates a surge in liquidity on the ask side, suggesting investors are looking to sell as the price nears its all-time high.

Market Dynamics and Imbalance

The current mismatch in the order book, with the ask side surpassing the bid side, is a significant development. This imbalance, according to Dessislava Aubert, a research analyst at Kaiko, points to the building of limit orders on the sell side, potentially signaling profit-taking behavior among traders. Bitcoin's price surge of almost 60% since the beginning of the year has led to increased selling pressure as investors seek to capitalize on gains.

Market Makers and Order Book Numbers

Market makers, who provide liquidity to the order book, could be contributing to the imbalance in order book numbers. They are constantly hedging their exposure to maintain a direction-neutral portfolio. The strong increase in demand and net buying on most exchanges in recent days suggests that market makers may be positioning themselves accordingly. The cumulative volume delta (CVD) on major spot exchanges since Feb. 25 shows a positive and rising trend, indicating a net buying pressure in the market.

Bitcoin's Price Movement

After hitting record highs, Bitcoin's price has retraced slightly and is currently trading at around $66,700, showing little change on a 24-hour basis. The broader market gauge, the CoinDesk 20 Index, is down 1.5% at 2,553. The price movement reflects the ongoing battle between profit-taking and buying pressure in the market.

Street Views

• Dessislava Aubert, Kaiko (Neutral on Bitcoin):

  "The current mismatch is notable because the 2% BTC ask depth has surpassed the bid depth for the longest period since early 2021 (when our data starts). It typically suggests building of limit orders on the sell side of the order book and could mean that traders are taking profit as BTC nears its all-time high."