Bitcoin’s Venezuela hedge is winning – But BTC may pay the price IF…

Market makers are calling the current strike on Venezuela bullish for crypto. 

At first look, which may sound like a stretch. Nevertheless, if you have a look at how capital has been rotating into danger property, the argument begins to make sense.

Thus far, the Whole Market Cap has been up 7%, exhibiting a stable $250 billion influx.

That mentioned, it’s not simply in regards to the technicals. 

Extra importantly, the “timing” strengthens the bull case. Not like extended conflicts that usually push capital into legacy property, this bout of FUD was short-lived. Because of this, capital rotated again into Bitcoin [BTC].

Supply: TradingView (BTC/USDT)

The end result? Bitcoin is seeing near 2× the capital inflows of gold (XAU).

In the meantime, the oil narrative appears related. Any actual provide affect from Venezuela would take months to succeed in U.S. markets. Due to that, capital flows into oil stay capped, with positive aspects operating 2× decrease than BTC.

Briefly, Bitcoin is performing as the popular hedge amid present macro FUD.

That mentioned, skeptics have questioned this “Venezuela-driven” rally, arguing it lacks the basics for a sustained transfer. That places on-chain knowledge in focus. If a divergence emerges, is that this simply one other “sell-the-news” transfer?

Bitcoin positive aspects face headwinds from low spot quantity

From a liquidity standpoint, Bitcoin confirmed a transparent divergence.

On the Derivatives facet, a current $450 million short liquidation worn out bets on the draw back after the strike. Because of this, BTC reclaimed $94k, triggering the most important quick liquidity sweep in over a month.

Consequently, speculative capital is now constructing. Bitcoin’s Open Curiosity (OI) jumped about $3 billion in a single day.

What’s extra, this introduced complete OI to almost $62 billion, returning it to late-November ranges.

Supply: Glassnode

On this context, Glassnode’s current report flashes warning.

Wanting nearer, Bitcoin’s Combination Spot Quantity, at round $10 billion, has printed its lowest stage since November 2023. Because of this, the report highlighted this as a “sharp distinction” with the present upside available in the market.

Due to this, the needle tilts towards skeptics.

With BTC’s on-chain liquidity skinny, sell-the-news issues make sense. Therefore, the rally is shaping up like a hype cycle, lacking the momentum to push previous $100k, leaving the market uncovered to a attainable lengthy squeeze.

Remaining Ideas

• The short-lived Venezuela FUD pushed $250 billion into crypto, with BTC seeing almost 2× the inflows of gold, whereas oil positive aspects stay capped.
• Regardless of the rally, on-chain metrics present low spot quantity and leveraged positions, suggesting a possible “sell-the-news” transfer and better volatility.