Over the past few days, the price of bitcoin has attempted a correction, rising from $29,000 to a little over $32,000 on Tuesday. Unfortunately, buyers were not confident enough, and the bears halted the recovery, pushing the price back towards $30K on Wednesday.
Now, an analyst at the popular cryptocurrency research resource crypto quant Discloses five reasons for which this could have been expected and which puts into question any further recovery effort.
Spot exchange reserves rising
Generally, BTC held on exchanges is much easier to liquidate than stored in a cold wallet. This is why analysts consider the large amount of BTC on the exchanges as a sign of concern.
As seen in the chart above, the number of bitcoins on exchanges has increased along with the price during the last surge.
This is a clear indication that the confidence of the holders in this rally is low. Furthermore, it shows that they are “selling the boom” rather than preparing for further growth.
Whales are not supporting the move
Another note that the analyst made was that “the whale ratio on the spot exchange is very active in the warning zone.”
This coupled with the fact that “the supply of UTXOs above $1M and between $100M and $1M is not receiving any positive moves – only smaller ones,” indicates that whales are not behind this most recent increase. Huh.
spot netflow unconnected
If Spot Exchange Reserve shows how many bitcoins are on the exchanges, Spot NetFlow shows how many of them flow in and out. If the amount of inflow exceeds the amount of net inflow, we have a positive net inflow – this is considered bearish because holders are loading their coins into exchanges with the possibility of liquidating them.
Higher netflow values indicate increasing selling pressure. Currently the inflow completely dominates the outflow.” – noted the analyst.
In addition to all of the above, the projected leverage ratio also reached a new all-time high, which shows that there are a lot of leveraged positions, creating a high probability of a liquidation cascade.
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