Bitcoin Is Still In Bear Territory, Says CryptoQuant.
CryptoQuant says the Bitcoin exchange inflow trend needs to change for a significant shift in market direction.
CryptoQuant, in its weekly Bitcoin highlights released today, asserts that Bitcoin remains in a downward market trend despite the crypto market rally on Wednesday following the US Consumer Price Index (CPI) release, as Bitcoin inflow to exchanges remains high.
“Exchange Inflow Spent Output Value Bands, which show the value of bitcoin addresses inflows to exchanges, demonstrate a bigger amount of bitcoin addresses moved to exchanges after the inflation date was announced,” the crypto analysis firm explains.
Additionally, the post reveals that the movement of Bitcoin to exchanges from holders of 1k to 10k BTC on Wednesday spiked beyond the normal range.
On Wednesday, the US Labor Department CPI data release revealed that inflation had cooled to 8.5% in July from 9.1% in June. Consequently, in response to the news, equity and crypto markets rallied. Bitcoin and Ethereum jumped to 60-day highs as Bitcoin closed in on $25k and Ethereum reached above $1,900.
Notably, several market participants hope that as inflation slows, the Fed will raise rates less aggressively and be able to avoid throwing the economy into a recession to get inflation under control. However, it is worth noting that the macroeconomic outlook is not clear yet. Energy concerns in Europe remain very real and could worsen in the winter as Russia threatens to cut Europe off.
According to CryptoQuant’s flow analysis, we need to see Bitcoin move from spot exchanges like Coinbase into derivative exchanges for Bitcoin to leave the bear market territory. As per the analysis, the flow of Bitcoin from spot exchanges to derivative exchanges is a crucial indicator of risk-on sentiment in the markets, implying that traders are willing to trade with leverage or use Bitcoin as collateral for other trades.
While CryptoQuant maintains that we are still firmly in bear territory, it is worth noting that several pundits believe that this will not be the case for much longer. Notably, crypto analyst Rekt Capital predicts that the market will form a price bottom in the next quarter.
Bitcoin is currently trading just below the $24k price point, down 2.38% in the last 24 hours but up 3.23% in the last seven days.
Disclaimer: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic’s opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
-Advertisement-
