GOOD MORNING

The price is making a grab of lower liquidity

Now let’s analyse Bitcoin spot volumes and see what useful information we can pull from the data.

First things first, the large chart with the yellow bars represents Bitcoin spot volume.

On the one-hour chart, we can see a clear volume spike when Bitcoin moved from around $77,000 down towards $76,000.

So the obvious question is: when volume spikes like that, is it buying or selling?

Recently, every time Bitcoin has seen an aggressive move lower, we have also seen a spike in spot volume. But the important part is what happens afterwards.

Those volume spikes have not been followed by strong upside reversals.

They have been followed by more downside.

In other words, each sell-off is being met by another sell-off, not by aggressive spot buying.

That tells us something important: very few people are actively buying spot Bitcoin here.

The volume that is coming into the spot market appears to be mostly selling pressure. Yes, that selling is hitting an order book, but as price moves lower, the order book starts to look weaker because spot demand is not materially increasing.

Looking at the Bitcoin volume overview for the day, Bitcoin spot volume is only up around 5.68%.

Bitcoin futures volume, meanwhile, is up around 17.84%.

That is a big difference.

A 17.84% increase in futures volume shows traders are still actively participating with leverage.

But only a 5.68% rise in spot volume tells me that buyers are not particularly interested in accumulating spot Bitcoin at these prices.

That creates a real issue when deciding whether to exit a short position.

If nobody seems to care about buying the underlying asset, then why would you rush to close the short?

That is the difficult question.

I am currently around $9 million short, and based on this data alone, the argument for staying short is actually getting stronger, not weaker.

Over the past four hours, Bitcoin spot volume has dropped around 50% since that big spike.

So the market has already started drying up again.

That means the sell-off was not met with some strong, aggressive effort to restore price. Normally, when a CME gap is sitting above, you might expect a stronger bounce attempt. So far, we are not really seeing that.

To be fair, it is still early in the session, so we cannot be too rigid. But as we go through today’s analysis, the data is starting to challenge my initial thought that I should maybe close and expect a bounce.

Instead, the data is starting to suggest that holding the short may actually be the better decision.

That is why we have to stay agile.

We can only read the data in front of us. We can only read the money.

The other important point here is the taker buy versus taker sell data on Bitcoin spot volume over the past 24 hours.

Bitcoin taker buy volume is currently around 48.42%.

Bitcoin taker sell volume is around 51.58%.

That means spot selling pressure is still outweighing spot buying pressure.

And compared with the futures side, there is proportionally more sell pressure showing up in the spot market.

That is important because if spot selling is heavier than futures selling, then the structure becomes very attractive for large players.

In theory, a large player can dump spot Bitcoin while also opening large short positions into that weakness.

That creates a strong incentive for major holders, ETF-related desks, or large institutions to profit from downside pressure while the rest of the market sits there expecting a bounce that may never arrive.

I am not saying that is definitely what is happening.

But the incentive is clearly there.

If spot demand is weak, futures volume is rising, taker sell volume is dominating, and each volume spike is being followed by more downside instead of recovery, then the market is still behaving like a sell-side market.

So as much as I was considering taking profit earlier, this spot volume data is not giving me a strong reason to close the short yet.

If anything, it is making the case for holding stronger.

Now let’s move on to the Bitcoin liquidation heat map and Bitcoin open interest.

I’m putting these two together because they are giving slightly different signals, and that is exactly why this is an interesting decision point.

Starting with the 24-hour Bitcoin liquidation heat map, we can see Bitcoin is currently trapped between roughly $77,300 and $76,500.

A break of either side likely sends price into the next liquidity zone.

The level that still looks very attractive is down around $76,000. That is the level we have been watching all weekend, and it is still very much in play.

So the setup could be this:

Bitcoin pushes down towards $76,000, grabs that liquidity, makes a slightly higher low, and then starts moving back up towards the $80,000s, potentially even towards $85,000 if the recovery structure develops properly.

That is still generally my bias.

I do think we are getting closer to the end of this downside move. Not much has changed that view. I still think the market is probably setting up for upside soon.

The question is whether there is one more move lower first.

This is why I’m trying to work out whether now is the correct time to exit the short, or whether there is still a little more downside to capture.

The liquidation heat map is suggesting the market may still be initially bearish, because there is attractive liquidity below. But after that liquidity is taken, the structure could turn much more bullish.

Then we move over to Bitcoin open interest.

Open interest did drop heavily during the initial move down, but if you look closely at the chart, the major OI drop happened first. After that, price continued moving lower while open interest started rising again.

That tells us one of two things.

If open interest is rising while price is falling, it could mean new short positions are entering the market and pressuring price lower.

But it could also mean traders are taking long exposure after the dump.

The problem is that open interest alone does not tell us whether the money entering the market is long or short.

So to get a better read, we need to look at the Bitcoin long-short ratio.

Over the past 24 hours, the market is still slightly short-heavy:

Longs: $23.14 billion
Shorts: $23.66 billion

But the crash happened mainly within the past few hours, so the shorter-term data matters more here.

Over the past four hours, we have:

Longs: $4.72 billion
Shorts: $4.33 billion

That is a meaningful shift.

It suggests that during the recent move, traders have started leaning back towards longs, or that shorts are taking profit and closing into the drop.

That makes this decision more complicated.

On one hand, the downside liquidity still looks attractive. A move into the $76,000 region would make complete sense.

On the other hand, the long-short data is starting to tell me that the market may be preparing for a bounce.

So this brings me back to the sensible decision: maybe it is time to start thinking seriously about closing the short, locking in profit, and not overstaying the trade.

We are definitely in a more questionable area of the market now.

The downside is still attractive, but the risk of a bounce is increasing.

I’ve attached the 48-hour, 1-month, and 6-month Ethereum liquidation heat maps, and this is where the market starts giving mixed signals.

On the 48-hour Ethereum heat map, there is liquidity on both sides of price, but ETH is currently hugging the upper liquidity zone. If we were plotting VWAP across this structure, we would likely be near the upper red band, and when price hugs that area, it can often hold there before pushing higher.

So short term, that is not ideal for the short.

But the higher timeframe heat maps tell a different story.

On the 1-month Ethereum liquidation heat map, price keeps bouncing into liquidity, and there are still major liquidation zones sitting below. The $1,800 area in particular has a huge amount of liquidity, which is hard to ignore.

Then on the 6-month Ethereum heat map, the downside liquidity is even more significant. There is a massive amount of untapped liquidity beneath the market.

So with Ethereum, the question is simple:

Do we bounce first because the short-term heat map is pushing into upside liquidity, or do we continue lower because the higher timeframe downside liquidity is too attractive?

That is the Ethereum side.

Now bringing it back to Bitcoin, this matters because Bitcoin has already lost support around $78,000, while we still have the CME gap risk above.

My original theory was that we may leave the CME gap open and continue lower. That is still possible.

But this is Bitcoin. It often comes back up, retests broken support, and makes the trade uncomfortable before choosing the real direction, especially on a Monday morning.

So the decision is not simple.

Ethereum’s short-term heat map suggests a bounce is possible, but the higher timeframe Ethereum heat maps still show major downside liquidity. At the same time, Bitcoin has lost an important support level.

That is why I’m not rushing the decision.

The market is mixed, but the larger liquidity picture still gives me a reason to stay cautious on the upside and not assume the bounce is guaranteed.

Finally, this is where things get really interesting: Ethereum spot volume.

Over the past 30 days, Ethereum spot volume has made up only around 5.26% of the futures market.

That is extremely low.

Spot volume has continued declining throughout this entire move, and the last time we saw a big spike in volume after a sharp move down, followed by volume declining again afterwards, price continued lower.

Follow the money.

If the same structure plays out again, then $1,800 and potentially below becomes the obvious Ethereum target.

No one really wants to hear that, but that is the brutal reality of the market right now.

Now, here is where it gets even more interesting.

Ethereum spot volume is up 31.35% over the past 24 hours, sitting around $1.91 billion. That is not terribly far away from Bitcoin’s $3.3 billion in spot volume over the same period.

So the question is:

Why is Ethereum spot volume rising so aggressively compared to futures volume, while still only making up roughly 5% of Ethereum’s overall market volume?

To me, the answer is simple.

It looks like people are getting out before something bad happens.

This is not clean accumulation. This does not look like aggressive spot buyers stepping in and defending the market.

It looks like exit volume.

We also have wider risk-off signals building in traditional markets. The Gates Foundation Trust has exited its remaining Microsoft position, and there are fresh stress signals around hedge funds and liquidity across the market.

That does not automatically mean everything crashes, but it does add to the overall picture that markets may be getting worse, not better.

And that is why I am struggling to justify taking profit too early.

It is difficult, because this is a lot of money. The position is big, the profit is big, and the temptation to lock it in is obviously there.

But if the data is telling us that spot sellers are still in control, then closing too early could be the mistake.

The clearest answer comes from the taker buy versus taker sell data.

On Ethereum spot volume, taker sell volume is currently around 53.72%.

That is the key.

Ethereum spot volume is up 31.35% in the past 24 hours, but the majority of that increase is sell pressure.

That does not scream “buy the dip.”

It screams that sellers are still in control.

So when people ask why I am still considering holding the short, this is the reason.

Spot volume is rising, but it is rising because people are selling. Futures still dominate the market. Open interest remains important. Liquidity below remains attractive.

This is not a market where I want to blindly assume a bounce just because price has already dropped.

The bounce may come, but the data still says the market is weak.

And if Ethereum really starts opening up to the downside, this trade could become enormous.

Make sure you have channel notifications turned on, because this is exactly the kind of market where decisions have to be made quickly.

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