Bitcoin [BTC] The September price action started at a crossroads. The sideways price action over the past 6 days has made traders wonder who will win between the bulls and the bears. The persistent low volatility may be short-lived according to this analysis.
According to elcryptotavo, a CryptoQuant analyst with a pseudonym, Bitcoin is about to face an influx of volatility. The analyst highlighted interesting observations within the derivatives segment. Among these observations we can mention an increase in derivative reserves and a decrease in open interest.
An increase in currency reserves for derivatives is often a sign that the titles in the derivatives market are increasing their holdings.
Investors see a decrease in open interest as a sign that the dominant trend is losing momentum. In this case, Bitcoin has performed bearishly since mid-August.
Bitcoin funding rates and transaction fees mean that the metrics have also recorded increased activity over the past four days.
These observations confirm that buying pressure in the derivatives market is increasing. This could be a good opportunity for investors in the derivatives market to jump in trend and take advantage.
To make fun of the bull
Increased demand and volatility in the derivatives market is likely to affect the demand in the spot market.
The bullish demand wave may lead to a big rally in the short term. A gauge of Bitcoin’s distribution across the chain on Santiment reveals that buying pressure has already begun to build.
Bitcoin addresses containing more than 10,000 coins have accumulated since August 28. However, addresses holding between 100 and 10,000 BTC have trimmed their balances over the past five days, suppressing any bullish trend.
Unexpected potential risks?
Bitcoin may have started this week with relative uncertainty, but current observations confirm the upside. The shift to positive funding rates and increased volumes in the derivatives market are sound indicators that support the potential for some upside.
Traders should exercise caution, especially as we are now entering a new month. September has historically been bearish at least seven times out of ten. If history repeats itself, the market may head towards a bull trap.