Bitcoin anatomy of a bull run. Volume and sentiment analysis
The indicator with the red histogram is a ZScore of the price difference between the perpetual and spot market.
If the perpetual price is higher than the spot price for a shorter or longer period, the score is above 0, otherwise it is below 0. The higher the value of this indicator, the higher the price difference was in the last periods. It is a surrogate for the funding and premium index. This gives you an insight into market sentiment. A high value means that sentiment is positive. A negative value means sentiment is negative.
Below in black, something similar but looking at volume between perpetual and spot.
Perpetual is almost 4 times the Spot volume . So this indicator calculates 4 times the Spot volume and a Zscore was done with the perpetual volume and 4 times the spot volume . A truly empirical procedure.
A value below 0 indicates that the market is "skewed" towards spot and above 0 the market is "skewed" by perpetual.
The large accumulation range was between July and October 2020 (blue). Sentiment was negative just before and during the first phase of the bull market.
Between late December 2020 and late February 2021, volume shifted back through the spot market (yellow), signalling that more Bitcoins than normal were changing hands. This was the period of the Tesla purchase and onchain data showed miner selling bitcoin. For me this was the most important volume support in a bullish prospective. This phase was probably something hybrid between an accumulation and a redistribution especially in the second half of February.
You can see that in April the volume came back through the spot market.
If we look at a smaller time frame, we can see that spot volume increased more in the upper part of the consolidation of the last three months
This suggests a distribution rather than a reaccumulation. In the case of a reaccumulation, I would expect more spot volume in the lower range of the consolidation, and this was not the case.
This redistribution is much smaller than accumulation, it is probably just a correction and before the price goes up again we need to see some form of re-accumulation.
Institutions will not buy an expensive asset, they will buy cheap and if bitcoin is actually one of the most interesting assets, it must also be the strongest competitivity for that asset. If the institution want to buy cheap and the asset is scarce, the only way to have a cheap asset is price suppression to create a cheaper supply and a reaccumulation. That's probably what has happened and what I expect to happen in the next few months.
BIO
If the perpetual price is higher than the spot price for a shorter or longer period, the score is above 0, otherwise it is below 0. The higher the value of this indicator, the higher the price difference was in the last periods. It is a surrogate for the funding and premium index. This gives you an insight into market sentiment. A high value means that sentiment is positive. A negative value means sentiment is negative.
Below in black, something similar but looking at volume between perpetual and spot.
Perpetual is almost 4 times the Spot volume . So this indicator calculates 4 times the Spot volume and a Zscore was done with the perpetual volume and 4 times the spot volume . A truly empirical procedure.
A value below 0 indicates that the market is "skewed" towards spot and above 0 the market is "skewed" by perpetual.
The large accumulation range was between July and October 2020 (blue). Sentiment was negative just before and during the first phase of the bull market.
Between late December 2020 and late February 2021, volume shifted back through the spot market (yellow), signalling that more Bitcoins than normal were changing hands. This was the period of the Tesla purchase and onchain data showed miner selling bitcoin. For me this was the most important volume support in a bullish prospective. This phase was probably something hybrid between an accumulation and a redistribution especially in the second half of February.
You can see that in April the volume came back through the spot market.
If we look at a smaller time frame, we can see that spot volume increased more in the upper part of the consolidation of the last three months
This redistribution is much smaller than accumulation, it is probably just a correction and before the price goes up again we need to see some form of re-accumulation.
Institutions will not buy an expensive asset, they will buy cheap and if bitcoin is actually one of the most interesting assets, it must also be the strongest competitivity for that asset. If the institution want to buy cheap and the asset is scarce, the only way to have a cheap asset is price suppression to create a cheaper supply and a reaccumulation. That's probably what has happened and what I expect to happen in the next few months.
BIO