Decrease in Bitcoin Deposits to Cryptocurrency Platforms Reaches 2016 Minimum Levels
Bitcoin Rally on the Horizon, According to CryptoQuant Analyst
In a recent analysis, CryptoQuant analyst Alex Adler Jr. has suggested that an upcoming Bitcoin rally could be on the cards, based on a decrease in BTC deposits to exchanges and an increase in daily transactions without significant selling pressure from holders.
Adler's analysis indicates that the average daily transactions have risen from 340,000 to 364,000 within 48 hours, signaling stronger network activity and improved market sentiment. This increase in activity, however, is below the peaks of 530,000-666,000 seen in 2023-2024, suggesting that holders are responding calmly to price growth without actively unloading their positions.
Another key factor that Adler highlights is the declining deposit and inflow-to-reserves ratio. The current daily deposit number of 30,000 is three times lower than the 10-year average of 90,000, and the lowest levels of the inflow-to-reserves ratio are usually observed at the end of bear markets. This decrease in deposits and the inflow-to-reserves ratio could indicate potential for more significant price movements.
Adler also points out that the decrease in transfers to exchanges indicates that users are preferring to store their BTC in personal wallets rather than preparing to sell. This trend might lead to a Bitcoin shortage in the spot market, a trend previously observed before major Bitcoin rallies.
Experienced investors, according to Adler, often buy coins from distressed sellers at around $17,000 during these low levels. However, it's worth noting that the analyst's conclusion does not rule out the possibility of a deeper Bitcoin price correction before the rally.
In conclusion, Adler Jr.'s analysis adds to the anticipation of potential price movements in Bitcoin. The main factors he associates with a Bitcoin rally are:
- Rising daily Bitcoin network transactions reflecting increased activity and interest
- Lack of selling pressure from holders, indicating market confidence and healthy consolidation
- Transaction levels moving upward but still below previous highs, suggesting room for growth and strength in holder sentiment
- A decrease in Bitcoin transfers to exchanges, indicating a potential Bitcoin shortage in the spot market
While Adler's analysis does not provide a specific price prediction for the upcoming Bitcoin rally, it does emphasize the importance of monitoring these trends for those interested in the Bitcoin market.
[1] Source: CryptoQuant analysis by Alex Adler Jr. dated 31st December, 2024.
Crypto exchanges may experience a shortage of Bitcoin due to the decreasing transfers to exchanges, a trend that might lead to increased demand for the digital currency. This trend, coupled with the rising daily Bitcoin network transactions, the lack of selling pressure from holders, and the fact that transaction levels are moving upward but still below previous highs, could indicate potential significant price movements in the Bitcoin market. Investors who are interested in the Bitcoin market might find it beneficial to closely monitor these trends.
