A cloud of uncertainty is currently hanging over Bitcoin, especially ahead of Wednesday’s critical announcements. The charts may not offer clarity on what to expect, but a look at the on-chain activity can provide some insights into how Bitcoin could behave over the next few days.
Metrics that can shed light on what deep-pocketed investment firms are doing in the crypto space could prove reliable in uncertain times. Such firms have access to the best analysts and are well connected enough to secure information ahead of the rest of the market. Bitcoin option volume and purpose ETF holding metrics meet the above criteria.
The options volume metric recorded a sharp drop on April 29 and BITcoin was heavily sold the next day. Currently, Bitcoin Options volume is seen to have increased from $199 million on April 30 to nearly $560 million on May 3. Purpose ETF Holdings has surged from its monthly low of 29,917 BTC on April 18 to 31,453 BTC on May 3.
Source: Glassnode
Purpose ETF Flows bottomed at -1833 on April 12th and peaked at 1032 on April 26th, after which they fell to neutral. However, its flows are currently registering an increase of 303 in the first 3 days of May.
Purpose ETF and BTC Options Growth Signals Positive BTC Expectations?
The increase in BTC option volume as well as the Purpose ETF’s additional BTC purchases are a sign of the market’s interest in lower price levels. However, they may also be the result of dollar cost average at the discounted levels and not necessarily a sign that BTC will not chart another downtrend.
The metrics are consistent with observations in Bitcoin’s price action. For example, BTC has traded along its support line for the past three days, a sign that it is struggling with friction within the support area. However, it has attempted to rally in the past few hours, a sign of accumulation at the support line.
Source: TradingView
In the event of a rally, bitcoin could face strong resistance near the $43,000 price level, which coincides with the 0.382 Fibonacci level. Some of the support levels to watch out for in case of a bearish move are $36,300, $34,100, and $33,000, which were BTC’s previous turning points.
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