Quant Explains Similarities Between Current And Summer 2020 Bitcoin Markets
28 Avril 2022 - 9:00PM
NEWSBTC
A quant has pointed out some similarities between the current and
summer 2020 Bitcoin markets through on-chain data. Bitcoin Exchange
Supply Shock Ratio Has Rapidly Risen Recently As explained by an
analyst in a CryptoQuant post, there seem to be some similarities
between the current market trend and that during the summer of
2020. The “exchange supply” is an indicator that measures the total
amount of Bitcoin present on wallets of all exchanges. This supply
is usually assumed to be the selling supply of the crypto as
investors generally transfer their coins to exchanges for selling
purposes. The supply in cold wallets of investors, on the other
hand, is likely being held for accumulation, and is unlikely to be
sold. The ratio between this investor wallet supply and the
exchange reserve is called the “exchange supply shock ratio.” When
the value of this metric goes up, it means the supply on exchanges
is dropping and investors are filling up their cold wallets.
Related Reading | Bitcoin Futures Basis Nears One-Year Lows,
How Will This Affect BTC? On the other hand, a downtrend suggests a
push to sell from sellers as they deposit their Bitcoin to
centralized exchanges. Now, here is a chart that shows the trend in
the BTC exchange supply shock ratio over the past couple of years:
The value of the indicator seems to have been on the rise recently
| Source: CryptoQuant In the above graph, the quant has marked the
relevant trends of similarity between the Bitcoin markets of summer
of 2020 and of right now. It looks like during both the periods,
the price was trending down or moving sideways, while the exchange
supply shock ratio had been rapidly going up. Related Reading
| Institutional Investors Bearish On Bitcoin, Ethereum. Here’s
What They’re Buying Despite the struggling price at the moment,
investors have showed demand for the crypto as they have been
rapidly accumulating recently (similar to back then). What followed
a few months after the summer of 2020 was the start of a new
Bitcoin bull run due to the resulting “supply shock.” The BTC price
is heavily tied to the stock market currently, and the analyst
believes it’s possible that once it decouples, a similar shock
could be there this time as well. BTC Price At the time of writing,
Bitcoin’s price is trading around $39.8k, down 7% in the past week.
Over the last month, the crypto has lost 15% in value. The below
chart shows the trend in the price of the coin over the past five
days. The price of the crypto looks to be steadily climbing back up
after the plunge down a few days ago | Source: BTCUSD on
TradingView Featured image from Unsplash.com, charts from
TradingView.com, CryptoQuant.com
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