Bitcoin’s spot rate is stable, but investors are unsure of the upward trend following the sudden drop on June 11. Bitcoin has a stable trend, above $67,000, and is down, even though it gained on June 12.
Even with this confidence level there is still concern because the coin remains under $72,000. This line of reaction is becoming a major liquidation point. BTC can cause a surge of liquidation if it is broken. This could accelerate the launch to $74,000.
What will happen to Bitcoin demand in the spot market?
Take to X: One on-chain analyst said Bitcoin’s spot price is below $72,000 due to hedge fund shorting futures.
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The Chicago Mercantile Exchange has seen hedge funds increase their BTC-shorts by $1 billion over the course of the last seven days.
The analyst believes that two things need to happen in order for this trend to be reversed and prices supported. While the BTC trading on CME does not indicate a negative trend, it is a hedge fund strategy that uses sophisticated arbitrage to provide a level of protection. Therefore, coin holders need to look at their fundamentals.
Hedge funds short BTC futures at CME while simultaneously buying them on the spot markets. For the coin to reach $74,000 and break the $72,000 barrier, analysts said that users would need to buy 2x the amount of BTC Futures sold on the spot market.
BTC price must drop for short-sellers to exit
Bitcoin’s price must drop if there are no incentives to raise the spot price. In this instance, falling prices encourage hedge funds to sell their short positions, lest they have to continue paying funding rate. Short sellers are required to pay the longs in a bearish environment, when prices of futures begin to drop.
It remains to be determined whether there will be an increase in demand on the spot market. It is clear that there is institutional interest in Bitcoin. However, hedge funds are the ones who have been using Bitcoin to arbitrage. CMEProfits are desired regardless of market movements.
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Analysts also shared The trader used another chart to reinforce the bullish outlook. The trader utilised the “Growth Rate” Comparing changes to the Bitcoin market cap and its realized value.
![Bitcoin "growth rate" metric down | Source: @AxelAdlerJr via X](https://fxruhanahmed.com/2/wp-content/uploads/2024/06/1718311520_993_Here-Are-2-Things-That-Must-Happen-For-BTC-To.jpeg)
Presently, this metric stands at 0.001, which is below 0.002, so the market may be overheated. Bulls could be gearing up for a return.
Featured image is from DALLE and chart by TradingView
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Source: www.newsbtc.com