Phi Deltalytics

The number of spot exchange stablecoin deposits has significantly surged over the past few days, with minimal corresponding increases in spot exchange stablecoin withdrawals. This trend suggests increasing demand in the crypto spot exchanges. Historically, such dynamics have often preceded significant short-term bullish or bearish moves in the market, indicating potential for notable price action in the near term.  

The short-term SOPR (Spent Output Profit Ratio) has found support above 1, indicating a bullish sentiment in the market. A SOPR value above 1 means that coins moved on that day are, on average, selling at a profit, while a value below 1 indicates that they are selling at a loss. The recent retest of the 1 level, which represents the break-even point for short-term holders, is particularly significant. This support suggests that holders are unwilling to sell at a loss, reducing selling pressure. As the SOPR consistently remains above 1, it signals that profit-taking is being absorbed. With the market not overly heated, this dynamic has the potential to push Bitcoin's price upwards.  

As of the latest data, Bitcoin's funding rate has stabilized with the 7-day Simple Moving Average at 0.45%, significantly lower than the 3-4% seen in early March when Bitcoin's price was at a lower level. This rate is comparable to levels observed in September and April last year, which preceded bullish price movements. In previous "dead-cat-bounce" scenarios, funding rates were higher, with March 2021 seeing a rate close to 3% before a correction to $30,000, and November 2021 rates between 0.7% and 0.8% before the 2022 bear market.  

Bitcoin's price surges have failed to translate into a commensurate uptick in adoption, as evidenced by a persistent downtrend in active addresses throughout 2024. While the transition of some on-chain participants to ETF holders may introduce complexities in data interpretation, sufficient time has likely elapsed post-ETF for stabilization. In this context, amid increasing uncertainly, I think a heightened responsiveness to shorter-term signals is needed.  

In the current market climate, Bitcoin's short-term Spent Output Profit Ratio (SOPR) has entered a zone of indecisive direction, juxtaposed against the sustained bullish momentum of the adjusted SOPR. This divergence underscores a nuanced landscape wherein short-term holders confront losses and potential erosion of confidence. While fluctuations of this nature are not uncommon, particularly during periods of price exploration toward new all-time highs, heightened vigilance is warranted. The persistence of a bullish aSOPR amidst wavering short-term SOPR trends gives rise to the possibility of a rapid downward shift once the aSOPR trajectory reverses.  

Whale Bitcoin exchange inflow has observed a notable surge in recent data, constituting a substantial portion of overall exchange inflow. This uptick potentially signifies significant profit-taking by whales amidst the 2024 Bitcoin bull run. While acknowledging that such metrics occasionally generate false signals, prudent caution is warranted in interpreting market dynamics.  

In past Bitcoin cycles, the market dynamics have often involved a transition of Bitcoin from long-term holders to short-term holders during periods of heightened activity. This shift typically occurs as long-term holders begin to distribute and capitalize on profits. However, the current market presents a deviation from this pattern. The percentage of 1-year inactive supply as a proportion of the total supply remains higher compared to late 2022. This indicates that we have yet to witness a significant movement of bitcoins from long-term holders to short-term holders in the current cycle. This observation implies that long-term holders are maintaining their positions rather than actively distributing holdings to short-term holders. As a result, there might be more room for upside potential until a significant distribution pattern emerges.  

With Bitcoin's price soaring to all-time highs, there's a notable discrepancy in the pace of adoption compared to price appreciation. Currently, the 14-day EMA of Bitcoin's active addresses exhibits a bearish divergence with price action (price marks higher highs while active addresses show lower highs). Historical data indicates that such bearish divergences often precede price corrections in Bitcoin. It's crucial to note that the launch of Bitcoin ETFs could potentially skew the number of active addresses, making the metric lower than its actual value. However, it remains prudent to monitor this metric closely. A lack of an upward trend in active addresses suggests that the surge in Bitcoin's price isn't adequately supported by a healthy increase in its underlying utility.  

Both the short-term Spent Output Profit Ratio (SOPR) and adjusted SOPR (aSOPR) for Bitcoin are consistently trending in the bullish zone. The recent decline in Bitcoin's price over the past few days has led both metrics to retest the break-even level of 1. This suggests that the current price level aligns closely with the cost basis of both short-term and overall seller groups. Historically, retesting such a level has resulted in a decrease in selling pressure, often acting as a support for the price.  

The matter of Huobi's reserve remains a point of concern. Despite Bitcoin's price surge of 216% since November 2022, the aggregate reserve across all spot crypto exchanges has increased by 187%. However, Huobi Global's reserve has experienced a notable decrease of 29% amidst the prevailing bullish market trend. Despite the exchange's efforts to launch new initiatives aimed at attracting new users, questions persist regarding its solvency.