Bitcoin investors remain greedy despite the cryptocurrency's low momentum in recent weeks. The Crypto Fear and Greed Index, which measures the sentiment of market participants, currently sits at a level of 72, indicating that investors are still exhibiting signs of greed.

Bitcoin has emerged as the top-performing asset class in Q1 2023, with gains of about 70%, making it the digital currency’s best quarter since Q1 2021. This outperformed big names like the S&P 500, Nasdaq 100, and iShares Core U.S. Aggregate Bond ETF. Bitcoin's gains have also surpassed those of gold and silver in the first three months of 2023.

Bitcoin's recent dip has left some investors concerned about a potential larger correction, as on-chain data shows that certain traders and whales are cashing out after a period of steady gains. CryptoQuant's Spent Output Profit Ratio data has surged above 1, indicating rising counts of hefty transactions transferring Bitcoin from exchanges to private wallets. While Bitcoin's overall trend is still bullish, Lukasz Wydra, a prominent Bitcoin and crypto analyst, highlighted that the current trading volumes are at their lowest for the year 2023, which is a similarity to what occurred in June 2022 before the drop from $30,000. This has left some investors cautious and watching market developments closely.

Bitcoin is approaching its one millionth address holding one BTC or more. This is exponential growth from this cohort, also known as “crabs”. The cohort that is just below “crabs”, is referred to as “shrimps”, which is currently accumulating Bitcoin at the third most aggressive rate in the past five years. This is encouraging to see as CryptoSlate analyzed that whales were distributing Bitcoin at an aggressive rate — which only distributed more Bitcoin to more holders.

The cryptocurrency options market has seen increased interest and trading activity for Bitcoin and Ethereum, with both contracts reaching a record open interest of 15,089 contracts as of March 27, according to CME Group. The estimated total contracts for the quarter stand at 32,000, a YoY growth of 430%. The options market activity coincides with a period of recovery for the cryptocurrency sector, with the market cap holding above $1 trillion and registering a growth of 32% since January 1, 2023. Bitcoin and Ethereum have led the market resurgence, with Bitcoin's market cap at $532.58 billion and Ethereum trading at $1,790 by press time. Other standout assets include XRP, which is holding above $0.50 after breaching the $0.40 resistance level.

Bitcoin's market value decreased by 1% to $27,546 on Friday following the expiration of options worth billions of dollars and bearish bets on the cryptocurrency's Ethereum-based wrapped version, WBTC. Market makers sold their spot and contracts to maintain a direction-neutral exposure, leading to the price drop. The sale of borrowed WBTC tokens may have also contributed to the decline. WBTC is the largest wrapped version of bitcoin on Ethereum and can be swapped on a 1:1 basis for BTC. The number of WBTC borrowed from decentralized lending protocol Aave has increased by 29% in two weeks, signaling renewed interest in taking an indirect bearish bet on bitcoin.

After several weeks of out-performance by Bitcoin prices, the market is taking a breather. Within this consolidation, we will gauge investor confidence in the uptrend using a suite of on-chain tools, ranging from exchange flows, to profit taking, and coin holding times.

A recent report from CoinShares revealed that the digital asset outflows in the last six weeks have been rising, settling at $424 million. During the last week, net outflows nearly exceeded the $100 million mark as the trend shows little to no signs of slowing down.

Bitcoin (BTC) briefly spiked to a nine-month high of $29,170 on Bitstamp on March 30, but quickly faced rejection and fell back to its starting point, leading traders to call it a "fakeout." Market participants remained cautious, and some traders referred to the move as a "deviation." Some traders noted that current trading volumes were at their lowest for 2023, potentially indicating a warning sign. Trading suite Decentrader noted that shorts currently had the upper hand, with short perps potentially profitable and being paid by longs to keep their positions open.

Bitcoin (BTC) could experience significant price swings heading into the weekend as options contracts worth billions of dollars tied to the cryptocurrency are set to expire on Friday. The quarterly expiry on crypto options exchange Deribit comprised over 81,000 call options worth $2.24 billion and 60,000 put options worth $1.73 billion. Market makers, who provide liquidity to an order book by creating buy and sell orders, are often forced to hedge their short gamma exposure by purchasing the cryptocurrency in the spot or futures market, which could bring more upside volatility. Liquidity conditions have worsened, making it hard for traders to execute large deals without causing price movements. At press time, bitcoin changed hands near $28,650, a 1% gain on the day.