By Shubh Varma
The crypto market continues to evolve as institutional adoption and innovative financing mechanisms reshape its trajectory. Convertible bonds are emerging as a key tool for crypto companies to raise capital, offering growth opportunities without immediate equity dilution.
Over $4 billion has been raised recently for Bitcoin mining and infrastructure expansion, signalling confidence in the sector’s long-term potential.
Bitcoin itself is solidifying its role as a financial asset, often viewed more as a reserve asset than a transactional currency. Events like the launch of Bitcoin spot ETF options have heightened market dynamics, with implied volatility surging before stabilizing.
Companies like MicroStrategy and others with leveraged Bitcoin positions highlight the growing intersection between crypto and traditional finance, where the use of convertible bonds and other instruments enhances yield and attracts capital from mainstream investors.
Similarly, small-cap stocks are gaining traction as investors rotate out of large-cap names. The Russell 2000 index showcases a shift toward smaller, lesser-known companies, many of which are now emerging as winners in this new cycle.
This rotation reflects an appetite for value in under-the-radar sectors and highlights the increasing prominence of financial mechanisms like convertible bonds. Just as these tools revolutionized corporate financing in the 1980s, they are now enabling growth in both crypto and traditional small-cap markets, supporting innovation and positioning these sectors for significant growth.
Together, these trends underscore a transformative period for assets that were previously seen as niche or undervalued.
As the price of bitcoin rapidly approaches 107 000, we first look at the leverage being used in the market. The average leverage taken by top traders remains relatively neutral, signalling that long-term momentum likely continues. However, any significant shifts in leverage should be closely monitored for directional cues.
Looking at order flow data, spot buying has been strong since the $94 000 low, particularly ramping up around December 15 on both Binance and Coinbase spot markets.
A closer examination of Coinbase CVD reveals a notable divergence: small orders (orange line), often a proxy for retail activity, have been selling, while larger orders (green line)—indicative of whale buying—are accumulating. This bullish divergence aligns with the recent upward trend.
Anchoring CVD and CLSD on a daily timeframe reveals no major outlier signals yet, even with BTC trading at $106 000. When these metrics hit extreme ranges and align, the resulting signals become more compelling—a scenario to watch closely in the coming days.
On the retail side, Binance data shows that only 35% of accounts are currently long BTC. This is historically low, and such levels have previously preceded price dips of around 8%.
This behaviour is driven by the oscillator-like nature of retail long percentages: as retail long interest increases, price tends to decrease, often trapping longs. An 8% dip from current levels would place BTC near $98 000—a region where significant long liquidity lies.
Furthermore, liquidation data indicates a clustering of long liquidation levels below the current price following the recent spike. Historically, price tends to sweep these levels before resuming its trend. The $98 000 zone may present an opportunity to re-enter long positions, as the broader bullish trend appears intact.
Shubh Varma is the CEO and co-founder of Hyblock Capital.
BUSINESS REPORT