Will Bitcoin Demand Soar In Spot Markets?

At spot rates, Bitcoin is firm, but traders doubt the uptrend following the unexpected dump on June 11. Currently, Bitcoin is stable, trending above $67,000 and down despite gains on June 12.

Bitcoin price shows little movement at spot levels on June 12, despite gains. Currently, the coin is trading above $67,000, down from earlier highs.

However, even at this level, there are concerns. The coin, despite all the bullish sentiment across the board, is still trading below $72,000. This reaction line is emerging as a key liquidation zone. If broken, BTC could unleash a wave of short liquidations, accelerating the lift-off to $74,000 and beyond.

Will Bitcoin Demand Soar In Spot Markets?

According to X, one on-chain analyst, Bitcoin is having trouble breaking $72,000 at spot levels due to hedge funds stacking shorts on futures.

While this development has been known for some time, hedge funds have increased their BTC shorts on the Chicago Mercantile Exchange (CME) by more than $1 billion in the past week alone.

As a result, the analyst argues that two things must occur to reverse this effect and support prices. While the BTC shorting on CME is not necessarily a bearish signal – hedge funds are hedging by playing a sophisticated arbitrage strategy – coin holders should be looking at fundamentals.

To help the coin break $72,000 and pierce $74,000, the analyst said users need to be buying at least 2X the amount of BTC futures shorted in the spot market.

BTC Price Needs To Fall For Short Sellers To Exit

If there is no incentive to lift spot prices higher, then Bitcoin price must fall. Falling prices will encourage short sellers, in this case, the hedge funds, to exit their positions lest they continue paying funding rates. In a bearish market, and when futures prices begin to fall, short sellers must pay longs for the index not to deviate.

Whether there will be a spike in demand in the spot market remains to be seen. However, it is clear that institutional interest in Bitcoin is present, and that hedge funds, as evidenced by their arbitrage trade using CME, are seeking to profit regardless of price movements.

The analyst also included another chart to support the bullish outlook. The trader used the “Growth Rate” metric to compare changes in Bitcoin’s market and realized cap.

Currently, the metric is at around 0.001, far below 0.002, indicating that the market is likely overheating. This could be a sign that the bulls are preparing to return.