On-chain data shows Bitcoin exchange depositing transactions are currently at a 4-year low, indicating that the bottom may be here.
Bitcoin 30-Day MA Exchange Depositing Transactions Have Refused
As indicated by the analyst in the CryptoQuant post, the current level of the metric is the same as in Q1 2019. “Exchange depositing transactions” is an indicator that measures the total number of Bitcoin transfers that go to centralized exchanges.
The difference between this metric and the more popular exchange flow is that the latter indicator tells you the total amount of BTC stored in the exchange, that is, the combined amount of the value of each transaction to be exchanged (instead of the total amount) , which is the value that can be developed by some whales and thus do not represent the trend followed by the entire market (especially retail investors).
But since the exchange’s depositing transactions only focus on the pure number of individual transfers rather than the amount, the metric can give a more accurate picture of whether the average investor is sending coins to the exchange or not now.
Since one of the main reasons for having a deposit on an exchange is for the purpose of selling, a high value of this indicator can have bearish implications for the crypto price. On the other hand, low values indicate that not many investors are applying selling pressure at the moment.
The chart below shows the trend in the 30-day moving average (MA) of Bitcoin exchange deposit transactions over the past few years.
The 30-day MA value of the metric seems to have been pretty low in recent days | Source: CryptoQuant
As shown in the chart, the 30-day MA Bitcoin exchange deposit transaction has been decreasing for a long time and is now very expensive. The current level is the lowest indicator observed since Q1 2019, four years ago.
At that time, the bear market of the cycle is in its final stage as the asset price is at its lowest point in the cycle. This means that the appetite for depositing coins to the exchange, and thus for selling BTC, is at a historically low level.
This may suggest that the selling pressure may have exhausted the current market, and the bottom may be close, if not yet, for the current BTC cycle. However, the number in the post also noted that the fundamental process that can be done here does not reduce the possibility that there is still a final downward push for Bitcoin.
The price of BTC
At the time of writing, Bitcoin is trading around $16,700, up 1% over the past week.
Looks like the value of the crypto has been consolidating sideways in the last few days | Source: BTCUSD on TradingView
Featured images from Thought Catalog on Unsplash.com, charts from TradingView.com, CryptoQuant.com