Bitcoin bulls should brace for a bearish impact as three of the leading on-chain indicators unanimously warn of possible sell-offs in the upcoming spot market.
CryptoQuant, a South Korea-based blockchain analytics firm, highlighted the latest results on their own statistics, one of which studies large BTC outflows from miners’ wallets and the other over-the-counter BTC purchases by institutional investors. The third metric maintains a tab of stablecoin deposits for all cryptocurrency exchanges.
Bitcoin corrects lower after hitting a record high near $42,000. Source: BTCUSD on TradingView.com
The Bearish Trio, Explained
All of the mentioned indicators pointed to a growing bearish bias in the Bitcoin market. For example, CryptoQuant’s Bitcoin Miners’ Position Index hit an eight-year high on Tuesday, underscoring that more and more bitcoin producers are shifting their rewards to other wallets – likely selling them since the BTC / USD exchange rate hit nearly $ 42,000.
“This is one of the reasons I keep my bearish bias”, said Ki-Young Ju, the founder of CryptoQuant.
Bitcoin Miners' Position Index. Source: CryptoQuant
Bitcoin miners have some of the largest fresh BTC supply chunks before sending them to the retail markets as per demand. When they restrict the BTC offer against higher demands, it tends to push the price of the cryptocurrency higher. Likewise, increasing the supply against demand lowers the BTC / USD exchange rate.
And the demand for Bitcoin is falling in the short term, according to CryptoQuant’s other two indicators. First the Coinbase Premium, a crypto cold storage storage service provided by the US exchange Coinbase Pro, yields lower Bitcoin deposits. That shows a decrease in institutional demand.
Bitcoin expects to go bullish should the Coinbase Premium crosses above the 50-mark. Source: CryptoQuant
‘We may see green candles in it BTC chart, but those would not come from institutional investors, but from crypto-native firms, ”noted Mr Ju. “Coinbase Premium doesn’t seem to be enough to break through key resistance levels. With no USD cash inflow, no more bull run. “
Second, the statistic has ‘All Stablecoins: All Exchange Reserves’ reached a record high on Tuesday. That points to an increase in the total number of transactions from Bitcoin to dollar-linked tokens such as USDT, USDC, BUSD, etc.
Stablecoin reserves across all exchanges hit a record high level. Source: CryptoQuant
Traders use stablecoins – which come with a 1: 1 dollar link – to park their crypto gains / losses without having to go through the regular banking channels every time.
Long-term bullish Bitcoin
Bitcoin bulls could still run through the bearish storm based on how 12.6 percent of the supply (2.3 million BTC) moved at a price above $ 30,000.
Data analysis company Glassnode marked the movement of capital, indicating that it may have arisen among institutional investors. If true, that provides Bitcoin natural support against aggressive downturns below USD 30,000.
“Considering that, this is substantial BTC Exceeded $ 30k only this year, ”tweeted Glassnode. “It suggests that investors are bringing in capital, and thus are confident in further price increases.”