![]() This implies that the market is dissimilar from the end of 2017, when retail investors flooded in, and that it’s not being led by retail investors-or at least, they haven’t come back yet. As such, Ju suggested that right now the market is dominated by whales and there are few retail investors. Image: CryptoQuant.Īs you can see in the graph, the red line tends to spike when there are large drops or when the market price hits rock bottom. Spikes show when larger amounts of Bitcoin are sent to exchanges. As a result, this metric can often show when the market has bottomed out and indicate the presence of retail investors. Ju explained that whales tend to realize their profits when retail investors are more active on exchanges, and this can be during times of extreme fear. If the average rises, that means whales are depositing large sums of Bitcoin, likely in preparation for a sale. This shows the average size of Bitcoin transactions sent to exchanges. So, given that market players are so important to this current cycle, how does CryptoQuant track their behavior? One key metric here, Ju points out, is the seven-day moving average for Bitcoin inflows to all exchanges. This makes sense when you consider companies like Tesla, which has bought $1.5 billion worth of Bitcoin-the company won’t want to keep the Bitcoin on an exchange, it will want its crypto put into cold storage (a much safer way of storing cryptocurrency, where the crypto wallet is not connected to the Internet). The idea here is that Bitcoin is being sucked away from exchanges into long-term storage, he said. The amount of Bitcoin held on exchanges has been falling. There’s no Bitcoins to sell in exchanges,” Ju told Decrypt. “I guess we are still in a sell-side liquidity crunch. But after peaking in March 2020, this number has been steadily declining. At the end of 2017, the Bitcoin balance on exchanges was at its all-time high (at the time) as retail investors flooded the market and kept their coins on exchanges. The way to see this in the charts is by looking at the current Bitcoin balance on exchanges. This time around, it’s large companies and investors that are accumulating even greater amounts of Bitcoin, while the retail crowd-made up of everyday, casual investors-has yet to show up. The key difference between this current market growth and Bitcoin’s surge at the end of 2017 was that it was led by huge retail demand then, according to Ju. 1.Institutional investors are leading this growth So to get a better understanding, we spoke to Ki Young Ju, CEO of crypto data provider CryptoQuant, who discussed five crucial ways to understand where the market’s at now-and where it’s heading. $0.04735193 0.32% Terra Classic (Wormhole)Īs markets go, it’s an exceptionally volatile and risky one.
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