Bitcoin Price Frictions Explained in 5 Simple Futures and Blockchain Signals

In recent days, Bitcoin has been struggling to break different levels above the $7000 mark. From the COVID-19 crisis to the anticipation surrounding the Bitcoin halving event, there are plenty of macro factors that can be associated with the increasing price resistance.

However, market datasets offer a more technical glimpse into factors that might influence short term movements in the price of Bitcoin. Specifically, looking into the futures market and the recent blockchain activity reveals some intriguing insights about the near time future of Bitcoin.

The intent of this analysis is not to overwhelm you with a lot of analytics that only a handful of experienced traders can understand. Quite the opposite, I would like to provide some very simple and tangible analysis that any retail investor can understand. Let’s dive in.

In recent days, Bitcoin has been struggle to cross levels above $7000. First around the $7300 mark and more recently around $7000.

There are some metrics that can help to add more context to the recent behavior of Bitcoin. For today, let’s focus our analysis in five simple metrics for futures and blockchain datasets that can be easily understood by any crypto enthusiast.

Futures Analysis

Derivatives markets are becoming an important signal to evaluate the performance of several crypto assets. In the current state of the crypto ecosystem, futures are the dominant form of derivative and, therefore, the one that contains the strongest series of signals. Let’s look at a few relevant insights from futures data.

1)The price of near term futures contracts is trending below $7000

IntoTheBlock’s futures price analysis shows that the current price for contracts settling until April 24th is currently trending below $7000. You can see that some of those contracts were comfortably above $7000 a few days before. This shows that traders are forecasting a bit of a price drop.

2)Open Interest is growing but price is down

In futures markets, the open interest metric measures the total number of open contracts on an asset. IntoTheBlock’s open interest analysis shows that the open interest in Bitcoin contracts is up while the price is down. This is a text bearish sign because it indicates that new money is coming into the market showing an aggressive sign of short selling.

3)Future contracts are showing negative annualized returns

IntoTheBlock’s futures annualized returns extrapolates the returns in specific futures contracts. The current analysis shows a negative estimation for most contracts which is a bearish sign.

Now let’s look at a couple of interesting metrics related to blockchain datasets.

Blockchain Analysis

One of the unique characteristics of blockchain datasets is that enables the estimation of individual investor positions. A couple of interesting insights in that area:

4) Strong resistance to get to $7200 but strong support at $6700

IntoTheBlock’s in-out money analysis reveals that there are over 1.3 million addresses that might act as a resistance level to get to $7200. However, there are over 900,000 addresses that own Bitcoin around $6700 which signals a strong level of support.

5)The number of UTXO younger than a day has increased while the UTXOs younger than a week has decreased.

This is clearly shown in IntoTheBlock’s UTXO analysis. The number of UTXO transactions younger than a day has increased by 24% in the last few days while the corresponding UTXOs between 1 day and 1 week has decreased by 10%. This signals an increasing sell activity.

These are some signals that explain the recent price movements in Bitcoin and some of the friction to achieve new highs. You can find more insights in about other 60 signals available in the IntoTheBlock platform.

(Disclaimer: The Author is the CTO at IntoTheBlock)