Certain on-chain metrics on the Bitcoin chart show a “risk of dumping,” according to data obtained from CryptoQuant’s Kim-Young Ju.
The chief executive warned of an indicator called “All Exchange Inflow Mean (144 Block MA)” that recently ventured into an area that normally precedes a bearish price move. In retrospect, the metric reflects the average of Bitcoin deposits on the global cryptocurrency trading platforms.
“If this indicator hits 2 BTC, it is likely sideways or bearish,” Mr Ju tweeted Tuesday. “It has always been sideways since November.”
Ready to buy again
The analyst also created speculation that traders would sell their profitable Bitcoin holdings in order to buy them back later at lower prices. He envisioned this possibility using two indicators: the total amount of bitcoin and stablecoin reserves on all exchanges.
As of Tuesday, BTC foreign exchange reserves fell while stable coin balances rose. This showed that traders are not pulling their profits from the exchanges, meaning they are ready to spend their stable coins once Bitcoin price hits their preferred support targets.
Mr Ju also said the bitcoin token’s strong purchasing power could offset declining pressure from the whales.
“I’m stuck with little leverage for a long time,” he noted.
Bitcoin R / R ratio
Bitcoin had a standout session last week when its price broke the $ 20,000 resistance level and hit a record high of $ 24,300 this Sunday. Nonetheless, the rally has also pushed the cryptocurrency’s momentum levels into overbought regions, a move that typically follows a downward correction.
The new weeks started with the expected bearish trend. Traders sold their profitable stocks at the local price, which caused BTC / USD to go down. Sentiment also rose sharply as the US dollar regained strength after hitting its two-year lows, giving Bitcoin enough room to go further down.
However, many analysts agree that a 30 to 40 percent correction after an asset rally of more than 150 percent in just three months is normal. For example, Liesl Eichholz, an analyst at Glassnode – an on-chain data analytics company – stated that Bitcoin’s risk / reward ratio remains attractive to investors even if the cryptocurrency is trading near its record high.
“Reserve risk is used to assess long-term owners’ confidence in the price of BTC. When the confidence is high and the price is low, the reserve risk remains low and there is an attractive risk / return, ”she wrote.