Bitcoin’s price has fluctuated between $29,900 and $31,160 over the past 18 days, raising concerns among investors looking for an explanation for the lack of clear trends.

Bitcoin (BTC) price rose 25.5% between June 15 and June 23, hitting a 13-month high, as investors were expected to become more aggressive and optimistic, but BTC was unable to sustain the price at 31,000 Above USD, and on-chain and derivatives remain neutral. The data do not support this thesis.

Bitcoin ETF Expects Tough Regulatory Environment

The current price situation is particularly worrisome given the anticipation sparked after BlackRock, the world’s largest fund manager, filed for a spot bitcoin exchange-traded fund (ETF) on June 16. Some analysts are predicting bitcoin prices will reach $100,000 by the end of the year, fueling frustration among traders betting on further gains.

It is worth noting that in mid-April, investors experienced a consolidation around $30,000, but it lasted no more than a week, and the price eventually fell to $28,000. This move explains why investors are hesitant to take positions at current price levels, preferring range-bound trading instead.

Despite initial excitement over the possibility of the SEC approving a bitcoin instrument for traditional financial markets, there has been negative price pressure due to regulatory actions against leading exchanges such as Coinbase and Binance.

This combination of positive triggers and a more stringent regulatory environment is likely to be the main reason for Bitcoin’s recent price action, and analyzing blockchain data can provide insight into network usage.

Bitcoin on-chain activity does not show a noticeable increase in activity

When it comes to blockchain-based analytics, network activity should be the starting point. This analysis should not be limited to transactions and foreign exchange flows. Cryptocurrencies are designed to facilitate the free trade and registration of digital assets, so the number of active users is critical.

7-day average active bitcoin addresses. Source: Coin Metrics

Bitcoin’s 7-day active addresses failed to exceed 1 million, only reaching the level it was three months ago. Additionally, the recent peak of 1.02 million addresses in April 2023 is 16% lower than the all-time high in January 2021. Thus, on-chain data indicates that the number of active users on the Bitcoin network, as measured by addresses, has stagnated. agent.

One could argue that it would be enough to restore the level of active addresses in April 2023, but to assess demand from institutional investors we should analyze the number of addresses on the network with at least 100 BTC, which at current prices is worth more than $3 million level.

Addresses holding more than 100 BTC. Source: Coin Metrics

Upon closer inspection, it is clear that this metric has remained constant at 15,900 addresses over the past few months. This suggests that the number of whales accumulating Bitcoin has not increased during this period.

With this in mind, and with active addresses yet to reach new highs, on-chain metrics suggest that the ETF launch has yet to spark a bullish momentum.

Bitcoin Derivatives Improve, But Most Remain Neutral

In order to confirm whether the price reflects the stagnation of network activity, one should analyze the Bitcoin derivatives indicator and measure the demand for leverage among professional traders. Quarterly bitcoin futures contracts typically trade at an annualized premium of 5% to 10% in a neutral market, known as contango, which is not unique to the cryptocurrency market.

Bitcoin 3-month futures contract premium.Source: Lavitas

On June 26, the Bitcoin futures contango breached the neutral 5% threshold, just five days after breaking support at $30,000. It took a full 18 months for investors to turn bullish with leveraged longs, reaching the highest price point since June 2022. If the price of Bitcoin falls by 8% in a short period of time, it will greatly increase the possibility of liquidation and panic selling.

Watching the options market is also helpful, as a delta deviation of 25% is a sure sign of when arbitrage desks and market makers are overcharging for upside or downside protection. Essentially, if a trader expects the price of Bitcoin to fall, the bias indicator will rise above 7%, while euphoria phases tend to have a negative bias of 7%.

Delta deviation of 25% for Bitcoin options.Source: Lavitas

However, an incremental skew of 25% failed to maintain levels below the neutral threshold for more than four days. According to options pricing indicators, the only moderately bullish period is July 1-July 5. The current balance of demand between calls and protective puts suggests a lack of confidence among professional traders.

These findings are especially disappointing considering that Bloomberg senior analysts estimate that there is a 50% chance of a Bitcoin ETF being approved. More optimism is expected to be reflected in on-chain and derivatives data after the recent price rally above $30,000, which could be driven by bitcoin prices 56% below all-time highs or impending court rulings against exchanges Influence.

Ultimately, the current on-chain and derivatives data fails to support the bullish momentum that sustains further price gains.

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