- CME open interest on Bitcoin grew, implying a decrease in volatility.
- Mining revenue fell as selling pressure increased.
According to a January 31 tweet from Arcane Research, Bitcoin [BTC] rally was slowing down. Despite this, institutional interest in Bitcoin continued to grow.
Ahead of the Curve – January 31
Bitcoin’s momentum has stalled and we see early trends of increased risk appetite from longs abroad, while institutional participation remains high as the FOMC press conference approaches.https:// t.co/E6m19OnqrZ
— Arcane Research (@ArcaneResearch) January 31, 2023
Read Bitcoin [BTC] Price prediction 2023-2024
One indicator of high institutional interest in Bitcoin was the growing CME open interest in Bitcoin. According to Arcane Research, the proportion of open interest on Bitcoin that is not related to exchange-traded funds (ETFs) increased from 53% to 57%.
This rise, coupled with a strong presence of institutional investors in Bitcoin futures, is a positive sign. The CME played a key role in determining the price of Bitcoin and was a driving force behind significant market swings in October 2020 and April 2021.
Source: arcane research
Along with the growing institutional interest, the implied volatility of BTC decreased. Over the past seven days, Bitcoin has been relatively stable, hovering around $23,000, causing implied volatility to decline.
At press time, implied volatility was in the low 50s, even for longer time frames. This was similar to the levels seen in early November, as the options market predicted a slower pace in the market.
Source: arcane research
miners fight
Along with the increase in institutional interest in the Bitcoin derivatives market, retail investors also became interested in Bitcoin. According to glass nodethe number of addresses that have more than 0.01 coins in their addresses increased over the last month.
At press time, the number of Bitcoin addresses with more than one coin hit an all-time high of 4.21 million.
However, while retail investors showed interest in Bitcoin, miners were not having a great time. Over the past week, the revenue generated by Bitcoin miners has dropped considerably. Along with that, rising electricity prices also negatively affected miners.
Hashrate Index analysis of how US electricity prices affected the Bitcoin mining industry in 2022. The double pressure of rising electricity prices and falling Bitcoin prices has led to bankruptcy to some of the biggest companies, like Core Scientific. https://t.co/k3opxZFToL pic.twitter.com/JkL0p3oLSH
— Wu Blockchain (@WuBlockchain) January 31, 2023
This could increase selling pressure on miners, which could incentivize them to sell their assets and negatively impact the price of BTC.
Source: Glassnode
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Another indicator of increasing selling pressure on holders would be the rising MVRV index, as evidenced by Santiment. This indicated that most addresses holding Bitcoin could benefit from selling their positions.
The long/short indicator was negative, suggesting that short-term holders would benefit the most from selling their positions. Whether these short-term holders decide to sell their holdings or continue with HODL remains to be seen.
Source: Feeling
