Bitcoin Absorption Rate: A Bullish On-ChaiMetric Indicating Higher Future Prices

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As a crypto space, analysts and investors are always on the lookout for new metrics and indicators that can provide insight into market trends. One such metric that has caught the attention of crypto communities recently is the annual Bitcoin absorption rate on exchanges. This on-chain metric, as reported by The Daily Hodl, shows signs of a bullish future for Bitcoin.

The absorption rate compares the annual rate of change of the trade balance to the volume of bitcoin mined during the same period. This measure provides a relative measure of the amount of new issuance absorbed by a particular cohort. It should be noted that values ​​above 100% are possible as coins can be transferred from other cohorts of investors.

James Mullarney, host of the hugely popular YouTube channel InvestAnswers, recently posted a video update to discuss this intriguing metric. Mullarney used an absorption chart from crypto analytics firm Glassnode to illustrate his point. He informed his 446,000 YouTube subscribers that the current uptake pattern points to much higher prices in the future for Bitcoin.

The rate of absorption can be positive or negative. A negative absorption rate, as currently seen, means that Bitcoin is withdrawn from exchanges at a higher rate than its deposit. This clear drainage is generally considered a bullish sign as it indicates less selling pressure. This suggests that investors are holding onto their Bitcoin instead of selling it on the exchange.

Bitcoin’s current annual absorption rate for exchanges is impressive minus 100%. This is a strong indication that investors are confident in Bitcoin’s future and are choosing to hold their assets rather than cash out.

As of this writing, Bitcoin is trading at $29,940, down 0.95% in the last 24 hours.

Featured Image Credit:Photo/illustrationbyRoyBuriviaPixabay

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