General market sentiment turned bullish in early October, which was historically a green month for Bitcoin. Traders seem to expect that they will hit ATH in the short term due to the new capital flowing into the market via the BTC ETF.

ProShares products reached over $ 1 billion in trading volume at the end of the first day of trading at a value of $ 1 million Bitcoin magazine reported.

The indicators of fear and greed are increasing due to recent events and Bitcoin’s performance. According to a report by Arcane Research, the fear and greed index has signaled “extreme greed” in the past two weeks.

This indicator often swings high when the crypto market hype an event like the introduction of the Coinbase exchange on the publicly traded market. Additionally, Arcane Research claims that Bitcoin experienced a similar phenomenon in 2020 when the rally started to $ 64,500.

Fear and Greed Index | Source: Arcane Research

As a potentially positive signal for the bulls, on-chain activity appears to be picking up, as evidenced by a slight increase in transaction fees on the BTC network. As reported, experts believe this shows that institutional demand for digital assets is returning.

Bitcoin demand is increasing

To support this hypothesis, Arcane Research found an escalating BTC spot volume. Looking at the graph below, the number fell sharply in May and July due to the continuous decline in the BTC price. It began to recover in August and continued its upward trend.

Arcane said the trading volume of BTC was $ 7.2 billion for the second week of October, with the 15th of that month seeing a daily trading volume of $ 12 billion.

“On the same day, the Bitcoin price rose 7.6%, which shows that the largest daily volume coincided with the most significant price increase. These developments signal a return of interest in Bitcoin after a boring summer. “

Source: Arcane Research

In the short term, traders could experience increased volatility in the market due to the BTC ETF effect. The derivatives sector appears to be overheating with open interest, indicating an increase in the number of positions leveraged.

2 / OI in BTC futures is approaching its all-time high. The OI growth reflects an increase in leverage. However, if the price of an asset goes up, the OI measured in USD will inevitably go up.

FTX, Binance, Bitfinex, and CME have all hit their highest OI scores in the past few days. pic.twitter.com/mXpbIb3UJc

– Delphi Digital (@Delphi_Digital) October 18, 2021

“OI in BTC futures is close to ATH. The growth in open interests reflects increased leverage. However, if the price of an asset goes up, the USD open interest will inevitably go up. FTX, Binance, Bitfinex and CME have all achieved their highest open interest in the last few days. “

As with the Coinbase launch, too much leverage due to liquidation can result in a short squeeze. It remains to be seen whether it favors the bulls or the bears.

The BTC flows from the exchanges continue to decline

According to analyst Wu, blockchain is on-chain data shows Bitcoin outflows have decreased over the past month.

This indicator is part of the net BTC flow and shows the net amount of coins in or out of the exchange wallet. Its value is calculated by taking the difference between the input current and the output current.

When the net flow is negative, the drain dominates. This means that more bitcoins are withdrawn from exchanges than are inserted. Such values ​​often signal bullishness for the cryptocurrency.

On the other hand, positive values ​​would imply an increased entry of coins into the exchanges, since inflows are stronger than outflows. This could lead to a drop in the BTC price.

Here is a graph showing the trend in BTC net outflows for the year:

The BTC outflow appears to be declining | The source: Glass knot

As the graph above shows, Bitcoin has seen significant outflows in the past few months, but has slowed recently.

It appears that in the 2021 bull cycle, outflows will dominate most of the time. When the net flow turned green (which meant investors started sending their money to the exchanges to sell) the price collapsed.

If the outflow continues to decline like this, the indicator could turn green again, which will soon lead to a further decline in prices.

It should be noted, however, that during the last bull run, the net flows became similarly neutral at several points, but no major correction occurred. So it remains to be seen whether the indicator will turn positive this time or not.

At the time of writing, the price of BTC is hovering around $ 64,324, up over 16% in the last 7 days and only about 1% below the ATH set in April, the top cryptocurrency is up 31% in value last month .

BiBTC price 4-hour chart | Source: Tradingview

After September with lots of crashes, Bitcoin took some big strides this October and is very close to ATH. It’s unclear where the coin could go next, but if the net flow turns positive, a crash could be imminent.

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