- The bullish sentiment around Bitcoin remains strong among investors but liquidity remains a major concern.
- Last week, the Bitcoin investment products saw inflows of $123 million with short-Bitcoin products seeing net outflows.
After hitting its 2023 high earlier this week on July 3, the world’s largest cryptocurrency Bitcoin (BTC) has been holding strongly above the $30,750 level. As of press time, BTC is trading at $30,853 with a market cap of just under $599 billion.
With the BTC price making a strong move above $30,000 last month, investor sentiment has turned bullish. According to CoinGlass data, the total value of open positions in the market remains at around $14.38 billion.
However, trading activity has decreased across different exchanges, with declines of 15-20 percent reported. This decline is also reflected in the liquidation volumes, with only $148,000 in positions liquidated in the past four hours and $7.2 million in the past 12 hours.
CoinGlass’ analysis of long and short positions indicates that long traders still have a slight advantage over short traders. But, when it comes to trader sentiment, there is a mixed response. A significant number of traders have a neutral stance, with no strong bullish or bearish sentiment.
Liquidity A Major Challenge
Going further, liquidity could be a major challenge with fiat liquidity on the decline. Thus, it could weigh heavily on risk assets such as tech stocks and crypto. Speaking to CoinDesk, Decentral Park Capital’s Portfolio Manager Lewis Harland said:
Market liquidity measures (global, U.S. domestic) point lower and would be unusual for BTC to be constructive with both liquidity measures declining over coming weeks. This is the single biggest reason we are cautious for BTC despite the bullish consensus market view and think this is being overlooked by investors.
All eyes for the investors will be on the macroeconomic data to be released later this week. According to data from TradingView and Decentral Park Capital, the global net liquidity indicator, which measures the amount of money available in various major economies, has decreased to $26.5 trillion.
This is the lowest level since November 2022. The net liquidity indicator for the U.S., which measures the amount of U.S. dollars available, has also dropped from $6.3 trillion to $6 trillion in recent weeks.
Bitcoin Investment Products See Inflows
Over the last two weeks, Bitcoin investment products have been seeing considerable inflows triggered with the filing of the spot Bitcoin ETF by BlackRock. As per data from CoinShares, investors are mainly focusing on Bitcoin, with a total of $123 million flowing into it. In the last two weeks, almost all of the money invested in digital assets went into Bitcoin.
This year, Bitcoin investment products have gone from a net outflow of $171 million to a net inflow. Even though the price of Bitcoin has gone up recently, investment products that bet against its price saw outflows of $0.9 million for the 10th consecutive week. However, overall, short-bitcoin products have received a total of $60 million in inflows this year, making them the second-best-performing assets.
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