Bitcoin (BTC) is testing the $81,000 price level, but the cryptocurrency’s foundation is again revealing a critical fracture. Notably, the Bitcoin: Market Balance Index (MBI) shows that the digital asset is bordering on extreme speculative risk.
Nobel-inspired model suggests Bitcoin correction
As of Monday, Bitcoin’s price is resting on a brittle support level that lacks organic strength. In addition, the Bitcoin: Global Network Accumulation vs. Distribution by All Cohorts (30-day) suggests that BTC whales have already distributed 27,649 BTC over the past month.
To explain, the Bitcoin: Global Network Accumulation vs. Distribution by All Cohorts (30D) measures whether Bitcoin holders – across different wallet sizes – have been collectively accumulating or selling BTC over the past 30 days.
A positive reading suggests net buying and accumulation, while a negative reading indicates broader distribution and potential selling pressure from market participants.
The whale-induced BTC dumping over the past month awakened the BTC: FEI Downside Alpha, a price model inspired by Nobel Laureate Eugene Fama. The acclaimed model offers institutional precision validated by backtests.
By using BTC’s 21-day moving average (MA), the model identifies a strong crossover – heavy directional flow (more than 1,000 BTC) coupled with the cryptocurrency’s structural breakdown.
For the uninitiated, the BTC: FEI Downside Alpha is a market risk model based on the Fama Efficiency Index (FEI) that attempts to identify bearish breakdowns and potential short-selling opportunities in Bitcoin.
It tracks large whale flows and structural market weakness, with lower FEI readings signaling rising downside risk and increased probability of a correction.
As of Monday, the FEI reading has tumbled into the tactical entry zone, meaning it is less than 95 percent. To be precise, the reading is currently placed at 94.59 percent.
Institutional appetite for BTC remains strong
Although the FEI model signals potential downside for BTC, the institutional demand for the top digital asset by market cap remains relatively strong.
For instance, Morgan Stanley’s new spot BTC ETF saw its first month with zero days of net outflows.
Similarly, Michael Saylor’s Strategy is continuing to accumulate BTC despite recent statements that it may sell some portion of its stack, if need be.
On the technical front, Bitcoin flashed a rare short squeeze signal as its funding rates fell to COVID levels.