- Bitcoin has a higher daily low and moves as high as USD 6,865 en route to another USD 7,000 attempt
- Bitcoin deposits at crypto exchanges are declining rapidly to low levels not seen since August last year, signalling the possible end to the Bitcoin selloff
Bitcoin price has been surprisingly stable today, in terms of settling price, of course, with spikes and drops only registering a daily low of USD 6,597 and a high at USD 6,865 (CoinDesk), signalling a slightly higher low than the day before. Will we finally see a Friday test of USD 7,000? Or will the bulls wait for the weekend or even more patiently for a new month next week?
But while waiting for that, there are some encouraging data elsewhere that suggests another sudden deep crash for Bitcoin could be less likely day by day. Of course, speculators will remain worried no matter what, since the mid-March 2020 crash will still be fresh in the memories of many who got caught out by Black Thursday, especially now that technical charts could be pointing towards tired bulls unable to pry price loose from global uncertainties in the market.
All the same, further and sustained price decline is almost certain to be out of the deck of cards right now, at least according to the number of on-chain deposits to exchanges, which have declined a lot over the past fortnight. Meaning to say, there is less Bitcoin being sent to exchanges, suggesting that the worst sell off periods are now over and fewer people are thinking to offload their Bitcoin for much-needed liquidity.
Blockchain analysis company Glassnode shows that the average of the number of transfers to identified exchange addresses in the past week has declined by an average of 35% to about 21,048 deposits, in fact the lowest witnessed since 26 August 2019. Sourcing the data from Binance, Bitcoin.de, Bitfinex, Bitstamp, Bittrex, Coinbase, Gemini, Hitbtc, Huobi, Kraken, Okex and Poloniex., Stack co-founder Matthew Dibb said to CoinDesk:
“It comes as no surprise that deposits on digital asset exchanges have dropped by more than 30 percent, as investor confidence took a hit after the sudden price crash seen on March 13 and many short-term traders and investors sold off their holdings to cut off what they saw as potential for further losses.”
In other words, the selling pressure has eased off. Speculators and weak hands have let go, and there is now more willingness to hold on and see if the dip has passed.
According to the same analysis, it makes for good logic that in a bear market, investors quickly move digital assets to exchanges and when upswings happen, digital assets move in the opposite direction. And typically, large transfers to exchange wallets are witnesses shortly before huge price crashes. This did indeed happen on 8 March when bitcoin and others were coming in hot to exchange wallets before the crash happened four days later.
CoinSwitch CEO Ashish Singhal added that the current low in deposits does signal a reluctance from investors to sell further Bitcoin and speaks of their confidence in the medium and long term potential for the world’s most recognized cryptocurrency.
Meanwhile, traditional markets — or at least, the stock market in the USA — are seeing some strong recoveries going on right now, and it could be that crypto traders are watching to see if this is a temporary rally or a decent push towards recovery, but a lot of that will ride on the North American market in these closing hours.
And when looking at the current imbalance of buy and sell orders on major exchanges like BitMEX and the lowering of total open interest of Bitcoin futures right now, analysts suggest buyer demand is also lacking, which could be a sign of months of accumulation phase.
Image Courtesy: Pixabay