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Bitcoin bulls should brace for a bearish impact as three of the leading on-chain indicators unanimously warn about potential sell-offs in the spot market ahead.
CryptoQuant, a South Korea-based blockchain analysis firm, highlighted the latest readings on their proprietary metrics, one of which studies large BTC outflows from minersâ wallets and the other over-the-counter BTC purchases by institutional investors. The third metric keeps a tab of stablecoin deposits across all the cryptocurrency exchanges.
Bitcoin corrects lower after hitting a record high near $42,000. Source: BTCUSD on TradingView.com
Bitcoin corrects lower after hitting a record high near $42,000. Source: BTCUSD on TradingView.com
The Bearish Trio, Explained
All the said indicators pointed to a brewing bearish bias in the Bitcoin market. For instance, the CryptoQuantâs Bitcoin Minersâ Position Index reached an eight-year high on Tuesday, underscoring that more and more bitcoin producers are moving their rewards to other walletsâprobably selling them ever since the BTC/USD exchange rate reached near $42,000.
âThis is one of the reasons why I keep my bearish bias,â said Ki-Young Ju, the founder of CryptoQuant.
Bitcoin Minersâ Position Index. Source: CryptoQuant
Bitcoin Miners' Position Index. Source: CryptoQuant
Bitcoin miners hold some of the biggest fresh BTC supply portions before dispatching them to retail markets per demand. When they limit the BTC supply against higher demands, it tends to push the cryptocurrencyâs price higher. Similarly, increasing the supply against demand lowers the BTC/USD exchange rate.
And the demand for Bitcoin is dropping in the short-term, shows the other two indicators put forth by CryptoQuant. First, the Coinbase Premium, a crypto cold storage custody service offered by US exchange Coinbase Pro, is turning out lower Bitcoin deposits. That shows a decline in institutional demand.
Bitcoin expects to go bullish should the Coinbase Premium crosses above the 50-mark. Source: CryptoQuant
Bitcoin expects to go bullish should the Coinbase Premium crosses above the 50-mark. Source: CryptoQuant
âWe might see green candles in BTC chart, but those wouldnât come from institutional investors, itâs from crypto native firms,â noted Mr. Ju. âCoinbase Premium looks not enough to break key resistance levels. Without USD spot inflows, no more bull-run.â
Second, the âAll Stablecoins: All Exchange Reservesâ metric has reached an all-time high on Tuesday. That points to an increase in the total amount of trades from Bitcoin to dollar-pegged tokens like USDT, USDC, BUSD, etc.
Stablecoin reserves across all exchanges hit a record high level. Source: CryptoQuant
Stablecoin reserves across all exchanges hit a record high level. Source: CryptoQuant
Traders use stablecoinsâthat come with a 1:1 dollar pegâto park their crypto profits/losses without needing to go through mainstream banking channels every time.
Bullish Bitcoin Long-Term
Bitcoin bulls could still walk through the bearish storm based on how 12.6 percent of its supply (2.3 million BTC) moved at a price above $30,000.
Data analytics firm Glassnode highlighted the capital traffic, stating that it may have originated at the end of institutional investors. If true, that provides Bitcoin natural support against aggressive downside attempts below $30,000.
âThis is substantial, given that BTC crossed $30k just this year,â tweeted Glassnode. âIt suggests investors are injecting capital, and therefore confidence in further price appreciation.â
Disclaimer
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