On-chain data shows that the Bitcoin exchange’s deposit transactions are now at a 4-year low, indicating that the bottom may be here.
Bitcoin 30-Day MA Exchange Deposit Transactions Have Declined
As noted by an analyst in a CryptoQuant afterthe current levels of the statistic are the same as in the first quarter of 2019. The “exchange deposit transactions” is an indicator that measures the total number of Bitcoin transfers making their way to centralized exchanges.
The difference between this statistic and the more popular one change inflow is that the last indicator tells us the total amount of BTC deposited on exchanges, i.e. the combined sum of the value of each transaction going to exchanges (rather than their total number), which is a value that can be inflated by a Single whales and are therefore not representative of the trend followed by the entire market (especially retail investors).
But since the bill deposit transactions only focus on the sheer number of individual transfers taking place rather than their amounts, the metric could provide a more accurate picture of whether the average investor is currently sending coins to exchanges or not.
Since one of the main reasons why holders deposit on exchanges is for selling purposes, a high value of this indicator can have bearish implications for the price of the cryptocurrency. On the other hand, low values imply that not many investors are exerting selling pressure right now.
The chart below shows the trend in the 30-day moving average (MA) Bitcoin exchange deposit trades over the past few years:
The 30-day MA value of the metric seems to have been pretty low in recent days | Source: CryptoQuant
As can be seen in the chart, the deposit trades of the 30-day MA Bitcoin exchange have been declining for quite some time and have recently reached quite low values. The current levels are the lowest the indicator has seen since the first quarter of 2019, four years ago.
At the time, the bear market of that cycle was in its final phase as the asset price was at a cyclical low. This means that the interest in depositing coins on exchanges, and thus selling BTC, is historically low.
This could indicate that the selling pressure has now been exhausted in the market, and the bottom could be close, if not already, to the current BTC cycle. However, the quantity in the post also notes that the bottoming process that may be here does not rule out the possibility that there is still one final push left for Bitcoin.
BTC price
At the time of writing, Bitcoin is trading around $16,700, up 1% over the past week.
Looks like the value of the crypto has been consolidating sideways in the last few days | Source: BTCUSD on TradingView
Featured image from Thought Catalog at Unsplash.com, charts from TradingView.com, CryptoQuant.com