Bitcoin’s momentum has dried up a bit since it pulled back from its all-time high (ATH) of $ 66,900 on October 20. As a result, the leading cryptocurrency is in a state of consolidation due to the low volume of transactions.
Market insight provider Glassnode explained:
“The Bitcoin transaction volume (7d MA) has just hit a 1-month low of 128,266,846 BTC.”
According to reports, this correction was triggered by profit-taking by long-term owners.
On the flip side, a bullish signal is emerging as Bitcoin balances on the exchanges have plummeted to a three-year low. Glass knot added:
“The Bitcoin balance held on the exchanges continued to decline this week. Balances have fallen to $ 2.474 million BTC and have returned to levels last seen in August 2018. As of February 2020, the average outflow rate is $ 30.85K BTC per month. “
It’s a bullish signal because it exemplifies a holding culture as coins typically leave crypto exchanges for cold storage and digital wallets.
Is the Bitcoin Market Less Leveraged?
Economist Alex Kruger believes the Bitcoin market is less leveraged than analysts think because the CME sparked the surge in Open Interest (OI) last month. He explained:
“Most of the Bitcoin OI surge last month was driven by the CME. The CME requires a margin of 40% -50%, so the maximum leverage is around 2x. In contrast, the leverage effect on crypto exchanges * is much higher. * Conclusion: The market is significantly less leveraged than analysts think. “
On-chain analyst Will Clemente suggests that the market adjustments in the BTC market should not dampen the mood of the crypto community because Bitcoin whales have been on a buying frenzy for the past two weeks.
It remains to be seen how Bitcoin will develop in the short term.
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