Bitcoin’s sideways price trend is driven by cash-and-carry trading and reduced trading volume as equilibrium between buyers and sellers impacts BTC price.
Bitcoin BTC $65,680 price has been consolidating within a roughly $7,500 range over the past four weeks as the 2017 all-time high of around $69,000 remained a stubborn resistance.
Notably, BTC has been fluctuating between $72,000, acting as resistance, and $60,000, serving as support since May 17. It has repeatedly tried to break through to a new all-time high of $73,800 without success.
At the time of publication on June 19, BTC’s price was up 0.8% to reach an intraday high of around $65,705 amid lower trading volumes, suggesting an extended consolidation period.
Let’s look at the reasons why BTC price remains stuck today.
The cash-and-carry arbitrage trading strategy continues
Bitcoin’s price has remained stagnant in recent weeks primarily due to cash-and-carry arbitrage strategy, as revealed by data from Glassnode.
Cash-and-carry arbitrage trading involves taking a market-neutral position by purchasing BTC in the spot market (going long) and simultaneously selling its futures contract (going short) when trading at a premium.
Data from Farside Investors and CoinShares reveal that inflows into crypto investment products were remarkably high over the week ending June 7. Despite this, BTC continued with its range-bound price action, leading to questions about why the inflows have not translated into a rally.
Glassnode explained that increased cases of cash-and-carry trades—long positions in the U.S. Spot ETFs combined with shorting futures on the CME Group exchange—have significantly diminished the impact of buy-side inflows into ETFs.
This trading phenomenon seems to continue at the moment. In their Week On Chain report published on June 18, Glassnode analysts noted,
“The cash-and-carry trade continues, with a particular uptick by institutional traders, reinforcing an expectation of range-bound trading for the time being.”
In explaining this, Glassnode uses the Spot Cumulative Volume Delta (CVD) metric, which describes the net bias in market taker buy vs. sell volume, measured in U.S. dollars.
“At the moment, a net sell-side bias dominates the spot market. This confluences the aforementioned idea that the demand-side is approximately equivalent to the sell-side pressure, keeping the market range bound.”
Reduced speculation appetite for BTC
Glassnode analysts reported that despite BTC’s sideways movement, holders are making 120% profits at current prices. However, following the all-time high, the magnitude of volume processed and transferred on the Bitcoin Network has drastically declined.
“This underscores a reduced appetite for speculation and heightened indecision in the market.”
A similar story can be observed when assessing the spot volume traded across major centralized exchanges.
Historical data from CoinMarketCap reveals that Bitcoin’s daily trading volume has decreased by 61.5% from its $102.3 billion when it breached its previous all-time highs to the current value of $39.5 billion.
“This demonstrates the strong correlation between onchain network settlement volumes and trade volumes, echoing a sentiment of boredom among investors,” Glassnode analysts wrote.
Bitcoin price stuck between two significant levels
Additional data from market intelligence firm IntoTheBlock helps to explain the ongoing stalemate between buyers and sellers. Its in/out of the money around price (IOMAP) model reveals that the price is currently between two significant levels.
There is robust support around the $61,000 to $65,000 demand zone, where approximately 807.83 million BTC were previously bought by 2.61 million addresses.
On the upside, the supplier congestion zone between $65,100 and $72,500 poses a stiff barrier for the bulls. This is where approximately 2.94 million BTC were previously bought by roughly 5.2 million addresses.
Glassnode says that although the high demand side has been sufficient to absorb sell-side pressure, it has been “insufficient to promote further upward growth,” leaving the price range bound.
“An equilibrium in both the demand and sell-side appears to be established, resulting in relatively stable prices and a notable lack in volatility.”
Risk Disclaimer
Although Sponsored Trading can be profitable, it is associated with a significant risk of losing your investment. The risks will increase when trading on margin companies. Traders must exercise due diligence and be careful when making their trading decisions. It is the sole responsibility of the Trader to learn and acquire the knowledge and experience required to use the Trading Platform and anything that will be required to trade properly.
