As the volatility in Bitcoin’s price has been stagnant for a couple of weeks, another ‘intuitive indicator’ of crypto exchange reserve gap suggests bullish accumulation.
The intuitive indicator is built by plotting the difference between the 30 and 90-day average of the crypto exchange reserves. We are witnessing a huge drop in its value indicating a reduction in exchange reserves.
According to the CEO of CryptoQuant (the firm that introduced the indicator), Ki Young Ju this is reminiscent of accumulation as the downside risk of sell-off is limited; he tweeted,
We can see how much #BTCis being deposited on exchanges this month compared to the last three months. Exchange reserve indicates the downside risk because people execute sell orders immediately.
Bitcoin [BTC] Exchange Reserve Gap (Source: Tweet)As reported earlier on CoinGape, the Bitcoin balance on exchanges hit a 13-month low at the start of this month. Moreover, the ‘deposit displacement’ is also accentuated by the development and rise of the trend in self and third-party custody.
The Bitcoin [BTC] balance on crypto exchanges has been in a downward spiral since the COVID-19 crash in the markets.
Derivatives Vs. Spot
The downtrend in the spot exchange inflows also tells us a similar story. It represents a rise in the bullish sentiments of spot buyers.
The derivatives traders’ have largely been short since the recovery through the coronavirus crash. Nevertheless, the analyst says the traders are still scared and uncertain of the direction in the market. Hence, it is likely that an avalanche move by spot exchange buyers or sellers is finally going to bring a considerable change in price.
Crypto analyst, @cmsholdings (alias), who perceives the dominance of spot traders tweeted,
When they do we break hard and reset quickly
In all probability, the direction of the next big move will incline the market sentiments more strongly towards the bulls or bears.
Do you think that the accumulation is bullish or bearish? Please share your analysis with us.