Bitcoin bulls should be prepared for a bearish impact as three of the leading on-chain indicators unanimously warn of possible sell-offs in the upcoming spot market.
CryptoQuant, a South Korea-based blockchain analytics firm, highlighted the latest metrics on its proprietary metrics, one of which examines large BTC outflows from miners’ wallets and the other over-the-counter BTC purchases by institutional investors. The third metric contains an overview of the stable coin deposits on all cryptocurrency exchanges.
Bitcoin corrects lower after 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 explains
All of the indicators mentioned pointed to a bearish trend in the Bitcoin market. For example, the CryptoQuant Bitcoin Miners’ Position Index hit an eight-year high on Tuesday, underscoring that more and more Bitcoin manufacturers are shifting their rewards to other wallets – likely since they hit the BTC / USD exchange rate near $ 42,000.
“This is one of the reasons I’m keeping my bearish bias,” said Ki-Young Ju, founder of CryptoQuant.
Bitcoin miners position index. Source: CryptoQuant
Bitcoin Miners' Position Index. Source: CryptoQuant
Bitcoin miners hold some of the biggest fresh BTC supplies before shipping them to retail markets per demand. If you limit the BTC supply against higher requirements, the price of the cryptocurrency tends to increase. Similarly, increasing supply versus demand will lower the BTC / USD exchange rate.
And the demand for Bitcoin is falling in the short term, show the other two indicators put forward by CryptoQuant. First, the Coinbase Premium, a crypto cold storage custody service offered by the US exchange Coinbase Pro, has lower Bitcoin deposits. This shows a decline in institutional demand.
Bitcoin expects an upward trend if the Coinbase Premium exceeds the 50 mark. Source: CryptoQuant
Bitcoin expects to go bullish should the Coinbase Premium crosses above the 50-mark. Source: CryptoQuant
“We might see green candles on the BTC graph, but those wouldn’t come from institutional investors, they would come from crypto-indigenous companies,” noted Ju. “Coinbase Premium doesn’t seem enough to break key resistance levels. No more bull run without USD spot inflows. ”
Second, the “All Stable Coins: All Foreign Exchange Reserves” metric hit an all-time high on Tuesday. This indicates an increase in the total number of trades from Bitcoin to dollar-linked tokens like USDT, USDC, BUSD, etc.
The stable coin reserves on all stock exchanges reached a record level. Source: CryptoQuant
Stablecoin reserves across all exchanges hit a record high level. Source: CryptoQuant
Traders use stablecoins – which come with a 1: 1 dollar pen – to park their crypto gains / losses without going through major banking channels every time.
Bullish Bitcoin long term
Bitcoin bulls could still run through the bearish storm considering how 12.6 percent of their supply (2.3 million BTC) moved at a price higher than $ 30,000.
Data analytics firm Glassnode highlighted capital movements, saying it may have emerged at the end of institutional investors. If so, it will provide Bitcoin natural support against aggressive downward attempts below $ 30,000.
“This is significant given that BTC just passed $ 30,000 this year,” tweeted Glassnode. “This suggests that investors are injecting capital and are therefore confident that prices will continue to rise.”