Cryptocurrency’s overall market capitalization has once again surpassed $1 trillion thanks to the market leaders Bitcoin and Ethereum, who emerged as overnight winners. After a significant bear market dip, the price of bitcoin has started to rise.
The uptrend started following a new year in 2023, but if Bitcoin can turn a particular level into a support floor, things can become interesting. Regardless, 2023 is off to a strong start as BTC is up almost 36% so far, and an overnight gain of 8% has lifted the price of Bitcoin above a significant threshold.
According to a verified author for CryptoQuant, Dan Lim spoke about on-chain data showing two indicators that might not be good for BTC. Dan Lim presents two indicators that lag behind the price of Bitcoin in a recent analysis that was featured by the staff of CryptoQuant.
“Looking at the open interest and leverage ratio, they have fallen sharply since the FTX incident, and despite the recent strong rally in #Bitcoin, these two indicators still haven’t overheated at all.”
Both metrics are still very close to multi-month lows, even if the Bitcoin price has now entirely recovered from the period of its fall brought on by the FTX/Alameda fiasco.
“It is necessary to have an active buying perspective if there is a strong drop of Bitcoin in the future or if it renews its low point.”
Mid-December marked the bottom for aggregate OI, and the rebound is still in its early stages. The second indicator, the Estimated Leverage Ratio, which represents the level of leverage that traders of derivatives choose to use for their holdings, bottomed out this week but is still unable to reach levels seen in December 2022.
In anticipation of the U.S. Department of Justice’s statement regarding a “significant international cryptocurrency action,” the two market leaders had momentarily declined. Crypto investors might feel as though we’ve returned to the exhilarating times of the Bitcoin bull run, even though we’ve obviously come a long way from its peak in 2021.