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Binance’s Buying Power Ratio Drops to Negative Values
The Buying Power Ratio is a metric that reflects the balance of investor sentiment. It shows the ratio of new capital inflows available for purchasing digital assets to the amount of funds being withdrawn from the exchange, CryptoQuant analysts explained.
The ratio reached its local peak of 2.01 points on August 14. This indicated growing buying pressure, when for every dollar spent on purchasing bitcoin, more than $2 in stablecoins entered the market, according to CryptoQuant. Against the backdrop of the rising Buying Power Ratio, bitcoin’s market value hit a new all-time high of $124,517 per coin.
However, the dynamics of the Buying Power Ratio then shifted sharply, falling to -0.81 points by August 17. According to CryptoQuant experts, the indicator signaled market dominance by sellers, which triggered mass trader liquidations amounting to $629 million. Of this, around $581 million came from long positions.
The liquidation of trader positions and the unexpected market reversal intensified panic among investors, particularly newcomers who had likely expected a longer continuation of digital asset price growth and positive crypto market momentum.
The total cryptocurrency market capitalization fell from $4.2 trillion to $3.8 trillion. Bitcoin lost about 8% from its all-time high. At one point, the price of the leading cryptocurrency dropped to $114,366 per coin. Ether’s price also declined from a local peak of $4,780, returning to early August levels of around $4,200 per coin.
Earlier, analysts at Santiment noted that in the short term bitcoin will be unable to return to a bullish trend, as most investors have begun taking profits.
