Bitrabo Editorial
According to on-chain data, the taker buy-sell ratio for Bitcoin (BTC) has reached a level not seen since February 2021, which may indicate a bullish market sentiment.
What is the Taker Buy-Sell Ratio?
The “taker buy-sell ratio” compares the taker buy and taker sell volumes in the BTC market. It measures the ratio between the two, and when it is less than one, it means that the taker sells volume is greater than the taker buys volume. This indicates that there is higher selling pressure in the market, which suggests a bearish sentiment. If the ratio rises above one, it means that taker buy volumes are overwhelming taker sell volume, which implies that investors are willing to buy the coin at a higher price. Such market trends can point to a bullish mentality.
The graph below shows the trend of the 24-day simple moving average (SMA) of the taker buy-sell ratio over the past few months:
The 24-day SMA value of the metric seems to have been quite high in recent days | Source: CryptoQuant
As shown, the 24-day SMA of the taker buy-sell ratio has observed a significant rise, which has surpassed the one mark. This implies that the taker buy volumes have significantly exceeded taker sell volumes, with the metric registering values similar to two cases witnessed in January when the rally emerged. However, the analyst notes that the recent surge in the open interest metric may have triggered the increase in taker buy-sell ratio levels, implying that the surge is not indicative of a bullish market in itself.
The open interest metric indicates the total amount of Bitcoin futures market contracts open on derivative platforms, and it has grown rapidly in recent days, which may be the cause of the increase in the taker buy-sell ratio, as the analyst explains:
“In other words, while the derivatives market may seem bullish, any position taken will invariably result in a counter-trade through a settlement (or liquidation)”
How the market responds to the taker buy volume surge after the latest BTC price rebound remains to be seen.
BTC Price Update
As of writing, BTC is trading around $27,800 after a 4% increase over the past week.
The digital asset has witnessed a surge in the past few days | Source: BTCUSD on TradingView
Featured image courtesy of Kanchanara on Unsplash, charts from TradingView.com and CryptoQuant.com.