The Bitcoin (BTC) market has been a subject of interest for many in the cryptocurrency space, with the recent price action painting an overtly bearish sentiment on the surface. However, beneath this surface-level negativity lies a more nuanced story that reveals potential buying opportunities and a floor to prices.
Sellers Dominate at the Surface Level
On major spot and perpetual futures exchanges, the uptrend in the quote level (the going market rate) has flipped to a downtrend, indicating that more traders are willing to sell at the current market price. According to data source Hyblock Capital, this shift is evident on both the spot and perpetual markets.
Order Book Depth: A Different Story
The order book depth from quote level (0%) and 1% shows a similar pattern, with an upward trend having shifted to a downward trend at these levels. Order book depth represents the combined value of buy and sell orders at specific levels (1%, 2%, 5%) from the ongoing market price. This metric is crucial in determining the market’s ability to absorb large orders at stable prices.
Market Makers’ Territory
"At the quote level, there was an upward trend, which has now shifted to a downward trend, indicating selling pressure," says Hyblock Capital in their analysis post on X. "Between the quote level to 1%, the action is the same as the Market Makers (MMs)." This indicates that market makers are operating in this region, adding to the selling pressure.
Seller Dominance: A Given
The seller dominance near the quote level comes as no surprise, given the recent price action in BTC. The leading cryptocurrency has declined from over $102,000 to $94,000 in days, mainly due to renewed U.S. inflation concerns. On Thursday, prices slipped as low as $92,500.
But There’s More to the Story
While the seller dominance at the quote level is a given, the real story lies in the continued uptrend in market depth from 2% to 5%. This uptrend points to more bids relative to asks at price levels away from the going market rate. In other words, buyers are waiting to enter the market at these levels.
Increased Demand
Between 1% – 2% and 2% – 5% of the book, we see increased demand (more bids than asks over time). This is a crucial aspect of the market’s dynamics, as it indicates that buyers are eagerly waiting to enter the market at these levels.
Market Depth Trends
The trends in BTC market depth at the quote level, 0% to 1%, 1% to 2%, and 2% to 5% reveal a complex story. While the surface-level trend appears bearish, the deeper levels of the order book tell a different tale.
Market Waiting Game
Bitcoin changed hands at around $94,000 at press time, with traders awaiting Friday’s U.S. nonfarm payrolls release to provide the next directional cue to risk assets. The market is waiting for a catalyst to move prices up or down, and it remains to be seen which way the market will break.
Trends in BTC Market Depth
The following table illustrates the trends in BTC market depth at different levels:
| Level | Trend |
| — | — |
| Quote level (0%) | Downtrend |
| 1% | Downtrend |
| 2% – 5% | Uptrend |
Conclusion
While the surface-level trend may appear bearish, a closer look at the market depth reveals a more nuanced story. The uptrend in market depth from 2% to 5% points to increased buying interest away from the going market rate. This indicates that buyers are waiting to enter the market at these levels, which could potentially provide support and put a floor under prices. As traders await Friday’s U.S. nonfarm payrolls release, it remains to be seen how the market will react.
