- Bitcoin Combined Books at 1-5% spot order-book depth showed shallow order-books.
- Retail investors began to take excessive risks in derivative market on slight recovery.
AMBCrypto’s analysis of Bitcoin [BTC] by the Combined Books revealed crucial insights into the order-book depth at the 1-5% range.
Notably, each price spike corresponded with moments when order-book depth dipped below 135 million. Historically, it signaled a potential bottom.
The instances were evident around the 13th and 21st of January, where Bitcoin’s price found strong support levels, suggesting a limited sell-side pressure and a possible setup for a bullish reversal.
Observing these highlighted periods, traders could gauge shifts in market sentiment and liquidity constraints, often preempting uptrends.
Source: Hyblock Capital
For instance, after the depth dropped significantly on the 19th of January, a subsequent rise in price followed, supporting the theory that shallow order books might indicate the exhaustion of sell pressure.
If the order book depth remains consistently low, it could hint at a sustained bullish trend, whereas a sudden increase might suggest incoming volatility or price corrections.
Why it could be still okay to take BTC risk?
Further analysis showed the aforementioned slight move saw Bitcoin’s Estimated Leverage Ratio (ELR) soar, reflecting confidence and willingness from retail investors to assume greater risks.
This led to the question — was the Bitcoin correction over, or the market was just trapping leveraged long traders?
The uptrend in leverage could also precipitate steep declines, as seen in 2022 when the ELR decreased, signaling a reduction in risk-taking during the downturn.
This indicated the role of leverage in amplifying market movements—both upswings and downturns.
Despite these cycles engaging in leveraged positions from retail investors, it remains compelling, as the investors can capitalize on market upturns, suggesting a continuous, albeit cautious, opportunity for risk-taking.
Source: CryptoQuant
The analysis of the market cycles revealed significant shifts coincide with Bitcoin surpassing 2.4 times its 200-day SMA. The value is currently set at $184,600 which is yet to hit.
This becomes bullish for the leveraged traders.
Historically, when BTC exceeded this threshold — followed a cycle shift. During the 2021 bull run, BTC reached peaks above $60K, aligning with its crossing of the 2.4x multiplier of its 200-day SMA and dropped.
These moments indicated heightened enthusiasm and increased trading volumes, but also heightened risk as BTC adjusted to new levels.
Source: Ali/X
Read Bitcoin’s [BTC] Price Prediction 2025–2026
As Bitcoin approaches these levels again, historical patterns suggest potential for continued uptrend. If Bitcoin maintains current momentum, it could head towards $184,600 level, benefitting the leveraged retail investors.
Conversely, failure to hold on momentum could indicate a cooling off, possibly leading to a consolidation phase or a downturn. This would result in pain for the leveraged retail investors.
