The Bitcoin (BTC) price has been looking pretty bullish so far in 2020. The number one cryptocurrency just passed the $10,000 mark for the second time in less than a week.
Surging deposits at crypto exchange platforms have previously been a reasonable indicator of an approaching market top. By this logic it seems investors aren’t looking to sell just yet.
Exchange Deposit Figures Suggest Further Upside for Bitcoin
At the time of writing, Bitcoin just crossed $10,000 for the second time in a matter of days. Typically, bullish euphoria has swept the industry:
That’s it, I’m calling it!
We will never see Bitcoin below $10k again.
— hodlonaut ?⚡? (@hodlonaut) February 11, 2020
Making a strong case for further Bitcoin upside is GlassNode. The crypto research firm highlights that previous Bitcoin market tops have been accompanied by surging deposits at digital asset trading venues.
A trend change to the downside (market top) would obviously require selling pressure to outweigh buying pressure. Since many investors need to deposit to be able to sell their holdings, GlassNode reasons that deposits increase at times when Bitcoin is overbought.
Historically, when #Bitcoin has approached local or global tops, we've seen increased deposits to exchanges as investors look to sell.
— glassnode (@glassnode) February 11, 2020
In the above tweet, GlassNode shows a seven-day moving average of exchange deposits from early 2017 to the present day. Overlaid is the BTC price.
The yellow sections represent local or global tops. True enough, exchange deposits did increase dramatically at each top during the period.
The indicator lines up with the June 2017 local top of almost $3,000, the September 2017 one at nearly $5,000, and the current all-time high of almost $20,000 in December 2017. Deposits also surged at the time of the post-crash bounce that failed to break $10,000 during 2018.
According to GlassNode’s data, deposits have been steadily falling since the previous local top of near $14,000 in July 2019. As the price has been trending upward during 2020, there has been no visible increase in the volume of deposits reported across exchanges.
“Not this time – there’s no indication that BTC is overvalued.”
Things Looking Increasingly Bullish for BTC
It’s not just exchange deposits that make Bitcoin look likely to continue its upwards trend. As reported by NewsBTC last week, there are a number of factors behind the return of Bitcoin optimism.
Of course, chief amongst these is this year’s Bitcoin halving. Around every four years, the number of new Bitcoin added to the circulating supply with every block reduces.
This spring, the network will undergo its third halving to date. The block reward will drop to just 6.25 Bitcoin.
Similarly, the Bitcoin hash rate has been growing rapidly regardless of BTC price. Close to the highest its ever been at the time of writing, the rising investment in hardware and electricity shows a highly optimistic BTC mining industry.
Featured Image from Shutterstock.