On-chain data shows that the deposit transactions of the BitcoinStock market are now at a 4-year low, suggesting the bottom may be here.
Bitcoin 30-Day MA Exchange deposit transactions have declined
As an analyst pointed out in a CryptoQuant post, the current values of the metric are the same as they were in the first quarter of 2019. Exchange Depositing Transactions is an indicator that measures the total number of bitcoin transfers that are routed to centralized exchanges.
The difference between this metric and the more popular exchange inflow is that the latter indicator gives us the total amount of BTC deposited on the exchanges, i.e. the combined sum of the value of each transaction that goes to the exchanges (rather than their total number). , which is a reading that can be inflated by a few whales and is therefore not representative of the trend that the overall market (particularly retail investors) is following.
However, since exchange deposit transactions only focus on the sheer number of individual transfers taking place and not their amounts, the metric could provide a more accurate picture of whether or not the average investor is currently sending coins to exchanges.
Since one of the main reasons why holders deposit into exchanges is for selling purposes, a high reading of this indicator can have bearish effects on the price of the crypto. On the downside, low readings mean that not many investors are currently selling.
The chart below shows the trend of the 30-day moving average (MA) of Bitcoin exchange deposit transactions over the past few years:
The 30-day MA of the metric seems to have been quite low for the past few days | Source: CryptoQuant
As shown in the chart, the 30-day MA bitcoin deposit transactions have been in decline for quite some time and recently reached quite low levels. The current readings are the lowest observed by the indicator since the first quarter of 2019 four years ago.
At that time he was bear market This cycle was in its final stages as the asset price was at cyclical lows. This means that the appetite to deposit coins on exchanges and use them to sell BTC is at historically low levels.
This could indicate that the selling pressure in the market may now have exhausted and the bottom for the current BTC cycle may be near, if not already. However, the quant in the post also notes that the possible bottoming process does not rule out the possibility that there could be one last push lower for Bitcoin.
At the time of writing, Bitcoin is trading around $16,700, up 1% over the past week.
It looks like the value of the crypto has been consolidating sideways for the past few days | Source: BTCUSD on TradingView Featured image from Thought Catalog on Unsplash.com, charts by TradingView.com, CryptoQuant.com
Source: Crypto News Deutsch