Bitcoin Rally Could Hit a Snag as Order-Book Imbalance Points to Profit-Taking

Bitcoin Price Rally Facing Resistance

The gap between liquidity on the ask and bid side within 2% of the market price has expanded to nearly $100 million, as per data monitored by Kaiko.

This widening gap is likely due to investors cashing in on high prices and the strategic moves of market makers.

Market Inbalance and Profit-Taking

Bitcoin’s price surge to a record high is prompting holders to take profits, leading to a temporary resistance in the rally.

Across 33 centralized exchanges, the discrepancy between potential sellers and buyers in bitcoin’s aggregated order book has increased significantly. The difference between the total dollar value of sell orders and buy orders within 2% of the market price has surged to around $100 million, a five-fold growth compared to usual levels, according to Kaiko, a company based in Paris.

Furthermore, there has been a higher volume of liquidity on the ask side since late January, indicating a willingness among investors to sell as the price rises. Bitcoin has seen a nearly 60% increase since the beginning of the year.

Traders Taking Profit

Dessislava Aubert, a research analyst at Kaiko, highlighted the significance of the mismatch between the BTC ask and bid depth, suggesting that the current trend indicates traders are capitalizing on the nearing all-time high of Bitcoin.

Bitcoin hit a new peak above $69,000 before retracting slightly and then rebounding. As of now, it is trading at $66,700, with minor changes over a 24-hour period. The broader market indicator, the CoinDesk 20 Index, is down 1.5% at 2,553.

Market Makers and Order Book Imbalance

Market makers may contribute to the numerical discrepancies in the order book, according to Aubert. These entities provide liquidity to the order book and are actively hedging their exposure to maintain a neutral portfolio.

There has been a noticeable uptick in demand and net buying on various exchanges in recent days, possibly linked to the positioning of market makers, Aubert explained.

Net Buying Pressure

The cumulative volume delta (CVD) on major spot exchanges has shown a positive trend since Feb. 25, indicating increasing net buying pressure. Binance, the largest crypto exchange by volume, has seen a nearly $1 billion growth in CVD since that date, contributing significantly to the buying pressure in the market.

Edited by Sheldon Reback.

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