Bitcoin boom looms? Institutional and derivatives data point to hidden bullish momentum

Market experts say Bitcoin is consolidating, not topping, and predict a retest before the next explosive breakout.

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

Long-term asset volatility has fallen to record lows, meaning Bitcoin is entering one of its calmest phases yet. Such a pattern has often preceded major price movements in the past.

No cycle top for BTC yet

According to Alpharactal, Bitcoin’s 180-day volatility has fallen to its lowest level ever. The statistic, 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 large price swings.

Crypto analyst Mr. Wall Street too believes Bitcoin is gearing up for its next big rally after a brief pullback from its recent all-time high. After a sharp 16% rise from $108,000 to $126,000 in just 10 days, he argues that BTC is consolidating rather than peaking. Contrary to the bearish calls for a cycle peak, he sees this phase as a preparation for a renewed wave of price development.

A key factor, he said, is the continued accumulation by institutional giants like BlackRock, which reportedly bought $1.2 billion worth of Bitcoin on Tuesday and $3.3 billion the week before. Mr. Wall Street argues that such large-scale buying will intensify and eventually absorb liquidity and force short sellers to capitulate.

Technically, he expects a retest of the four-hour EMA200 before a decisive breakout, which is expected to mirror the pattern seen before the $110,000 rally. On the macro front, he points to weakening US economic data and increasingly dovish action by the Federal Reserve as catalysts for the dollar’s depreciation. He believes this factor will further increase Bitcoin.

Bears retreat quickly

Bitcoin’s derivatives market also points to rapidly waning selling pressure.

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Net taker volume, a measure that compares the size of buy and sell orders on derivatives platforms, has bounced back from “an extreme low” of -$400 million to a neutral range.

This transition is therefore considered a crucial change in traders’ behavior, suggesting that bearish sentiment is waning after months of dominance. Such a recovery in net taker volume has previously coincided with phases where BTC price action received stronger support from derivatives activity.

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