According to on-chain statistics, the #bitcoin exchange reserve has significantly increased over the last day, suggesting that the price may see more declines.
A Significant Rise In Bitcoin Exchange Reserve Has Been Recorded
A few days ago, there was a crash that sent shockwaves through the whole cryptocurrency market as well as the price of Bitcoin, which suddenly fell from over $29,000 to around $26,000.
The asset hasn't shown any indications of recovery in the time since then, and as the chart below shows, its value has just continued to drift sideways.
The price of bitcoin is currently at $25,800, which indicates a weekly loss of 11%. The leading #cryptocurrency in the market performed worse than certain other prominent currencies last week, including #Ethereum (ETH) and Cardano (ADA).
Whether the asset has reached its bottom or if further drop is on the horizon is not yet evident, but if on-chain data is any indication, the latter may be more likely. As one expert noted in a post on CryptoQuant, the exchange reserve has increased recently.
The term "exchange reserve" in this context refers to the total quantity of Bitcoin that is currently held in the wallets of all centralised exchange platforms.
Investors are now depositing a net amount of the asset to these platforms when the value of this statistic increases. This tendency may have unfavourable effects on the price of the cryptocurrency because selling-related reasons are one of the primary causes for which holders transfer their coins to exchanges.
Conversely, drops in the indicator's value indicate that the holders are withdrawing their Bitcoin from these centralised companies. Such a pattern would indicate that investors are stockpiling right now, which would obviously be positive for cryptocurrencies in the long run.
The graph indicates that there has been a significant increase in the previous several hours in the Bitcoin exchange reserve, which suggests that investors have been making significant deposits to these platforms.
The graph demonstrates that the indicator increased before to the crisis as well, but the current growth's sharpness is on an entirely other scale.
The quant has included information on each platform's spot and derivative reserves, as well as the individual reserves of Coinbase and Binance, in the lower graph. Evidently, the derivatives sector of the market has seen the most of the increase, with Binance seeing the biggest jump.
Although investors often sell on spot markets, the majority of deposits may indicate that investors are only looking to establish fresh positions on the futures market, which can potentially increase volatility. But it may still go either way in terms of direction.
Nonetheless, a selloff would still be feasible given that the spot exchange reserve has also seen an increase (although one that is considerably lower in scope).
