TLDR
Bitcoin reached a new all-time high of $124,457 before pulling back to around $120,000
On-chain data shows short-term holders adopting a holding pattern, reducing selloffs
Exchange netflow metrics mirror patterns seen before previous bull markets in 2017 and 2021
NVT Golden Cross compression (53.92% drop) potentially signals a market turning point
Strong derivatives activity with $149.47 billion in trading volume suggests increased market participation
Bitcoin has experienced significant price volatility in recent days, reaching a new all-time high before pulling back. The leading cryptocurrency hit $124,457 on August 13 before retracing to approximately $120,000 at the time of writing. Despite this pullback, several key metrics suggest the bullish momentum may continue in the coming weeks.
The cryptocurrency’s exchange netflow metric has approached a bottom in early August, similar to patterns observed before the major rallies of 2017 and 2021. These historical lows often marked the beginning of explosive price movements in previous bull markets.
Long-term holders appear to be reducing selling pressure, creating potential supply constraints that could fuel upward momentum.
One of the most telling indicators is the NVT Golden Cross, which stood at 0.2709 after plunging 53.92%. This sharp decline represents a drop in valuation relative to transaction activity. In the past, such compressions have aligned with market bottoms that preceded strong rallies.
The metric suggests Bitcoin’s transaction network may be undervalued compared to its market capitalization. If historical patterns hold true, this compression could signal an imminent rebound phase.
Derivatives Market Shows Strength
The derivatives market for Bitcoin shows robust activity, with trading volume surging 65.37% to $149.47 billion. Open Interest rose 4.14% to $83.76 billion, while Options Volume jumped 127.92% to $9.43 billion.
Over a 24-hour period, Bitcoin saw $24.28 million in short liquidations compared to $17.16 million in long liquidations, indicating forced exits from bearish positions.
The BTC OI-weighted funding rate held at 0.0137%, reflecting steady positive sentiment among leveraged traders. This sustained positive funding suggests buyers are willing to pay premiums to maintain long positions, which typically supports price stability during strong uptrends.
The current funding rates suggest a healthy bullish bias without showing signs of over-leverage that might trigger sharp corrections.
Bitcoin’s taker-buy/sell ratio has climbed to a monthly high of 1.16, confirming the bullish tilt in sentiment among derivatives traders. This ratio measures the balance between market buy orders and sell orders on futures and perpetual contracts.
A value above one means more trades are executed at the ask price than at the bid price, signaling stronger buyer aggression. This indicates that buyers in the derivatives market are actively absorbing sell-side liquidity.
Short-Term Holders Show Conviction
On-chain data reveals an interesting pattern among Bitcoin’s short-term holders (STHs) – investors who have held their coins for 155 days or less. These investors have reduced their selloffs and gradually fallen into an accumulation pattern despite increasing market volatility.
This behavior is reflected in Bitcoin’s STH Spent Output Profit Ratio (STH-SOPR) metric, which briefly dipped below the neutral line but has since rebounded. The metric measures whether coins moved by short-term holders are being sold at a profit or loss.
When the STH-SOPR stays above the neutral one level, it indicates that short-term holders are selling at a profit, which signals strong market sentiment.
The movement of this metric above the neutral line is particularly important because short-term holders are among the most influential participants in Bitcoin’s price movements. With their cost bases often close to the current market price, they are usually the first to react to price swings.
Their decision to maintain holdings despite sharp price fluctuations reflects a degree of conviction that could help stabilize the market and potentially fuel another leg up in price.
If current trends persist, Bitcoin could be on track to retest the $122,000 level in the near term. A breakthrough above resistance at $122,190 might trigger a move back toward its all-time high of $124,457.
However, if volatility increases and bullish conviction weakens, sell-side pressure could push prices down to support levels around $115,892.
Bitcoin is currently trading at $119,937, representing a pullback of approximately 4% from its recent peak.
