Bitcoin (BTC) Continues to Exhibit On-Chain Strength Despite a Prolonged Period of Price Compression

According to Fidelity Digital Assets' VP of research, Chris Kuiper, the flagship crypto remains in its “Acceleration Phase,”

According to a May 16 report by CryptoQuant contributor Darkfost, the sustained selling pressure in the derivatives market is posing a structural barrier to Bitcoin’s breakout attempts despite favorable on-chain conditions and widespread anticipation of a move to new all-time highs.

Cumulative net taker volume has remained largely negative since Bitcoin reclaimed the $100,000 level,suggesting that short positions have outweighed longs, generating sustained selling pressure.

This imbalance is evident in the persistent downward trend of the indicator, especially over the past two weeks, despite a brief rally in mid-April.

The bearish positioning indicates that traders are skeptical of a near-term move to new all-time highs and are actively betting against further upside.

However, if this imbalance persists, Bitcoin’s upward potential remains capped despite favorable conditions in spot and on-chain markets.

The report also highlighted that derivatives activity has been a recurring theme throughout Bitcoin’s recent price movements.

During periods of strong accumulation, such as March and early April, when institutions and high-net-worth individuals engaged in sustained buying activity, leading to a reduction in coins available in exchanges and a spike in on-chain fees, there was a simultaneous increase in bearish positioning in the derivatives market.

However, despite these signals of bullish momentum, which would usually favor a breakout attempt, institutions' buying pressure was met with selling pressure from derivatives traders, preventing a decisive breakout.

This scenario played out several times in March and April, showcasing a friction point in Bitcoin’s price discovery process.

The report concluded that the sustained selling pressure from derivatives traders is a structural factor hindering Bitcoin’s breakout potential despite favorable on-chain fundamentals and signals of institutional accumulation.

For institutions to fully exert their impact and drive Bitcoin to new highs, they need to overwhelm the selling pressure in the derivatives market, which seems like a difficult but not impossible feat.

Ultimately, the direction of Bitcoin's price will depend on which trader category manages to exert greater influence on the market.

The post Derivatives traders are placing a structural barrier to Bitcoin’s breakout attempts despite favorable on-chain conditions and widespread anticipation of a move to new all-time highs, according to a May 16 report by CryptoQuant contributor Darkfost.

The sustained selling pressure in the derivatives market is preventing a structural breakout despite favorable signals in the spot and on-chain markets,suggesting that short positions have outweighed longs, generating sustained selling pressure.

This imbalance is evident in the persistent downward trend of the indicator, especially over the past two weeks, despite a brief rally in mid-April.

The bearish positioning indicates that traders are skeptical of a near-term move to new all-time highs and are actively betting against further upside.

However, if this imbalance persists, Bitcoin’s upward potential remains capped despite favorable conditions in spot and on-chain markets.

The report also highlighted that derivatives activity has been a recurring theme throughout Bitcoin’s recent price movements.

During periods of strong accumulation, such as March and early April, when institutions and high-net-worth individuals engaged in sustained buying activity, leading to a reduction in coins available in exchanges and a spike in on-chain fees, there was a simultaneous increase in bearish positioning in the derivatives market.

Despite these signals of bullish momentum, which would usually favor a breakout attempt, institutions' buying pressure was met with selling pressure from derivatives traders, preventing a decisive breakout.

This scenario played out several times in March and April, showcasing a friction point in Bitcoin’s price discovery process.

The report concluded that the sustained selling pressure from derivatives traders is a structural factor hindering Bitcoin’s breakout potential despite favorable on-chain fundamentals and signals of institutional accumulation.

For institutions to fully exert their impact and drive Bitcoin to new highs, they need to overwhelm the selling pressure in the derivatives market, which seems like a difficult but not impossible feat.

Ultimately, the direction of Bitcoin's price will depend on which trader category manages to exert greater influence on the market.