Bitcoin Interexchange Flow about to reverse, what it means

[ad_1]

On-chain data shows the Bitcoin Interexchange Flow Pulse is about to see a trend reversal, here’s what it may mean for the price of the crypto.

Bitcoin Interexchange Flow Pulse crosses its 90-day MA

According to CryptoQuant’s on-chain Year-End Dashboard release, trend shifts in this metric have historically occurred with phase shifts in the market. The “Interexchange Flow Pulse” is an indicator that measures the cumulative net flows over 1 year between Coinbase and derivatives exchanges.

When the value of this metric increases, it means that investors are currently transferring more coins from spot to derivatives exchanges and are therefore willing to take on more risk. On the other hand, the low values ​​suggest that little capital is currently flowing into derivatives trading.

Now, here is a chart that shows the trend of the Bitcoin Interexchange Flow Pulse, along with its 90-day moving average (MA), over the past few years:

Looks like the metric value is starting to roll over | Source: CryptoQuant

As you can see in the chart above, a pattern seems to have historically followed with the Bitcoin Interexchange Flow Pulse during crypto price uptrends. Each time the coin observed a bullish period, the indicator experienced a steady rise and remained above its 90-day MA.

The reason for this is that investors are generally willing to take on more risk during bull markets and therefore send larger and larger amounts to derivatives exchanges to establish leveraged positions.

However, each time the metric reversed its direction and crossed below the 90-day MA, an upper formation took place in the price of BTC and the uptrend ended. In the bear markets that followed such periods, the Interexchange Flow Pulse generally continued to decline and remained below its 3-month average. Again, why this happens is simple; bear markets occur when the average holder is unwilling to take risks and as a result capital flows into derivatives dry up.

This trend of the indicator continues until the turning point occurs again, where the price forms its bottom and the metric begins to rise in the opposite direction (passing above its 90-day MA in the process ).

Also in the current bear market, the Bitcoin Interexchange Flow Pulse has steadily declined while remaining below its 90-day MA. More recently, however, the decline appears to have stalled, and now the indicator is retesting its long-term average.

Going by the historical trend, a successful crossover and reversal in the path of the Interexchange Flow Pulse would mean that the bottom of the downside is reached for the current cycle, and a slow transition into a bull market could follow. .

BTC price

As of this writing, the price of Bitcoin is hovering around $16,600, down 1% in the past week.

Crypto Value Seems To Have Decreased In Last Two Days | Source: BTCUSD on TradingView

Featured image of Maxim Hopman from Unsplash.com, charts from TradingView.com, CryptoQuant.com

[ad_2]