As the price of Bitcoin [BTC] continues to stall around $11,000, traders are actively looking to judge the market sentiments to analyse the next big move. The flow of Bitcoin in and out of exchanges, along with the mining pool transfers can be useful in analysing the market sentiments.
The increase in deposits on exchanges is usually indicative of bearish sentiments among miners. Data analytics firm Arcane Research tweeted,
The BTC deposits at major exchanges has dropped significantly since April and is currently at the low-levels of May 2019. This suggests that more users prefer to store their BTC in private wallets, which may lead to a lower selling pressure the upcoming months.
Nevertheless, there are other factors causing this shift as well. The deposit displacement away from exchanges is accelerating as people are shifting to other methods of self-custody and storage.
Mining Pool Outflows
The outflow of Bitcoins from mining pools is also a potent indicator of the sentiments of the miners. Despite the surge in price, the outflow of miners has been lower than seen during April and May 2020.
Bitcoin [BTC] Mining Pool Outflows (Source)These indicators are pointing to the fact that the hodlers and miners are not rushing to book profits yet. However, while the exchange deposits have been falling, the bull market is causing an increase in the assets held on assets. This corresponds to the new buying momentum in retail assets. Philip Gradwell, the Chief Economist at leading analytics firm, Chainalysis, noted,
At the moment the market is much hotter than normal. As prices rise, we are seeing large increases in assets held on exchanges, similar to levels when prices fell in mid-March.
People who store assets on exchanges tend to be retail. So if bitcoin held on exchanges does not decrease it suggests retail is buying as prices rise, while pros bought the dip.
The price has risen from lows at $3850 from the COVID-19 crash levels to highs above $11,400. The crypto assets held in exchanges is increasing from the retail buying, the transfer of assets from crypto exchanges in the coming weeks will determine the course for the next swing move in Bitcoin [BTC].
Where do you think that Bitcoin [BTC] price is headed next? Please share your analysis with us.