According to the analysis company, the recent rise in the price of Bitcoin (BTC) may face a temporary slowdown. The rise, which reached a record level, seems to have triggered profit selling among BTC holders.
According to the analysis firm, the imbalance between potential sellers and buyers in Bitcoin's aggregate order book on 33 centralized exchanges sends a clear message. The difference between the total dollar value of orders to sell Bitcoin and buy orders within 2% of the market price has grown to nearly $100 million, according to Paris-based Kaiko. This figure is approximately five times its normal value.
Since late January, there has been relatively more liquidity on the sell side, representing potential supply to the market. This trend indicates that investors want to sell on the rise, according to the analysis company.
Dessislava Aubert, research analyst at Kaiko, said in her statement:
“The current mismatch is notable because the 2% BTC selling depth has exceeded the buying depth for the longest period since the beginning of 2021 (when our data begins).
This could typically mean that limit orders are being created on the sell side of the order book and investors are taking profits as BTC approaches its all-time high.”
According to Aubert, market makers may be partly responsible for the imbalance in order book figures. Market makers are always on the opposite side of investors' trades when agreeing to provide liquidity to the order book. They constantly hedge their risks to maintain a direction-independent portfolio.
“We have also been observing a strong increase in demand and net buying on most exchanges in recent days, so the imbalance may be related to market makers taking positions,” Aubert added.
*This is not investment advice.