Signs of Reversal in Cryptocurrency Market
The quantity of Bitcoin (BTC) held at exchanges has been dwindling gradually since mid-May, giving confidence that the worst of the market slump is over. At present levels, Bitcoin’s exchange inventory is at its lowest point since early January, as per crypto analytics firm Santiment.
The data and analytics firm tweeted Monday morning, “The six – month trough is a promising indicator, since it typically indicates that there is a reduced likelihood of additional big $BTC selloffs.” The start of May saw an increase in exchange inflows, which was likely a prelude to Bitcoin’s severe selloff during the middle of the month.
On May 19, the Bitcoin liquidation accelerated, resulting in a $1.2 trillion loss for the whole of cryptocurrency market. In the near term, exchange-flow info is a crucial measure for tracking Bitcoin’s price trend.
As increasing number of investors move their assets from cold wallets, potentially with the intention of liquidating, net inflows frequently presage a sharp selloff. For example, after the March 2020 COVID-19-related fall, Bitcoin saw the largest exchange inflows in May. Investors are seeing more grounds to be positive despite Bitcoin staying in a solid midterm decline.
The ratio of #Bitcoin‘s supply on exchanges has
encouragingly slid down to its lowest since early January. The 6-month low is a promising sign, as it generally will indicate that there is a decreased risk of more major $BTC selloffs. https://t.co/vFh7pcjUmX pic.twitter.com/t3duiStvg6
— Santiment (@santimentfeed) July 5, 2021
The increasing penetration in Latin America, the expected transfer of mining equipment from China to other areas, and rising signs that the market has hit the rock bottom are all reasons to be optimistic. Analysts, on the other hand, continue to caution of an unclear short-term prognosis, with some major industry figures predicting a harsher drop in 2021.