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Breaking News: Fed Holds Interest Rates Steady, Bitcoin Awaits Trend Reversal Above $27,000
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This On-Chain Metric Suggests Bitcoin Not In Danger Of Another Sharp Drawdown

Hououin Kyouma by Hououin Kyouma
11 months ago
in Bitcoin
Reading Time: 3 mins read

Historical data of an on-chain indicator could suggest Bitcoin may not be in danger of another sharp crash right now.

Bitcoin Spot Exchange Depositing Addresses Stay At Very Low Values

As pointed out by an analyst in a CryptoQuant post, signs are that another crash similar to Q3 2018 isn’t likely to happen currently.

The relevant indicator here is the “spot exchange depositing addresses,” which is a measure of the total number of Bitcoin wallet addresses that are making send transactions to centralized spot exchanges right now.

Generally, investors deposit their coins on spot exchanges for selling purposes. Thus, a spike in this metric can be bearish for the price of the crypto as it could be a hint at dumping behavior from a large number of addresses.

On the other hand, low values imply not many holders are adding to the selling pressure in the market at the moment.

Now, here is a chart that shows the trend in the Bitcoin spot exchange depositing addresses over the last few years:

Bitcoin Spot Exchange Depositing Addresses

Looks like the value of the metric has been going down in recent months | Source: CryptoQuant

As you can see in the above graph, the quant has marked the relevant zones of trend for the Bitcoin spot exchange depositing addresses.

It seems like usually around periods where this indicator has sharply risen up to local tops, the price of BTC has also observed a top and subsequently declined.

Related Reading: Will Bitcoin Tank Following The Charles Schwab Indicator? Do BTC Investors Need To Worry?

Since the bull run top last year, the spot exchange depositing addresses have been overall winding down, seeing only a couple of peaks in the period.

Some investors have recently been wondering whether another sharp drawdown is coming for Bitcoin in the near future, just like the one the 2018 bear market saw after months of sideways movement similar to now.

Looking at the chart for the trend during the 2017/2018 cycle, it’s apparent that the metric declined following the bull run top and then plateaued at low levels as the bear market went on.

Related Reading: Bitcoin Dominance To Regain Control Over Crypto? | BTC.D Analysis October 20, 2022

However, in Q3 2018, the indicator suddenly jumped up. A couple of months or so after this happened, the price observed a crash.

As during recent weeks there has been no such sharp increase in the indicator, the analyst believes there is no indication that a decline similar to then would take place now.

BTC Price

At the time of writing, Bitcoin’s price floats around $18.8k, down 4% in the last week.

Bitcoin Price Chart

The value of the crypto seems to have dipped below the $19k level again | Source: BTCUSD on TradingView
Featured image from André François McKenzie on Unsplash.com, charts from TradingView.com, CryptoQuant.com
Tags: bitcoinbitcoin crashBitcoin Selling AddressesBitcoin Spot Exchange Depositing AddressesBitcoin Spot Exchangesbtcbtcusd
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Hououin Kyouma

Hououin Kyouma

Kyouma is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021. Kyouma has been writing for many years, first as a hobbyist and later as a freelancer. He obtained a bachelor's in physics in 2022 and is planning on starting a master's in the same field in the near future. Kyouma is enthusiastic about the cryptocurrency industry and holds an active interest in on-chain analysis. His hobbies include gaming, anime, and football. You can find Kyouma on Twitter at @Kyouma29.

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