Bitcoin Boom Imminent? Institutional and Derivatives Data Hint at Hidden Bullish Momentum

Bitcoin (BTC) climbed above $126,000 for the first time ever on Tuesday. But what followed was a quick retreat of around 4% shortly thereafter. Despite the short-term pullback, the broader trend shows a historic lull in activity.

The asset’s long-term volatility has dropped to record lows, which means that Bitcoin is entering one of its calmest phases yet. Such a pattern has often preceded major price movements in the past.

Not a Cycle Top For BTC, Yet

According to Alphractal, Bitcoin’s 180-day volatility has fallen to its lowest level on record. The metric, which tracks the standard deviation of daily return fluctuations, indicates that traders are witnessing historic stability. The analytics platform explained that such low volatility often precedes major price swings.

Crypto analyst Mr. Wall Street also believes Bitcoin is gearing up for its next major rally after a brief pullback from its recent all-time high. Following a sharp 16% rise from $108,000 to $126,000 in just 10 days, he argues that BTC is consolidating rather than topping out. Contrary to bearish calls for a cycle peak, he sees this phase as a setup for a renewed surge into price discovery.

An important factor, according to him, is the ongoing accumulation by institutional giants like BlackRock, which reportedly purchased $1.2 billion in Bitcoin on Tuesday and $3.3 billion the week before. Mr. Wall Street contends that such large-scale buying will intensify and end up absorbing liquidity and forcing short sellers to capitulate.

Technically, he anticipates a retest of the 4-hour EMA200 before a decisive breakout, which is expected to echo the pattern seen before the $110,000 rally. On the macro front, he points to weakening US economic data and an increasingly dovish Federal Reserve stance as catalysts for dollar depreciation. This factor, he believes, will further lift Bitcoin.

Bears Retreating Fast

Bitcoin’s derivatives market is also pointing towards a rapidly fading selling pressure.

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The net taker volume, a metric comparing the size of buy and sell orders across derivatives platforms, has rebounded from “an extreme low” of -$400 million to a neutral range.

This transition is, hence, deemed a critical change in trader behavior, and suggests that bearish sentiment is waning after months of dominance. Such recoveries in net taker volume have previously coincided with phases where BTC’s price action gained stronger support from derivatives activity.

A similar setup was observed following the April correction, which led to renewed bullish momentum. The market’s medium-term outlook now appears to be stabilizing as buying and selling forces reach equilibrium.