Key bitcoin on-chain metrics have flipped bearish this week, suggesting the top cryptocurrency by market cap may extend its recent price losses in the short term.
On Tuesday, the net inflow of bitcoin to exchanges was 36,800 BTC - the biggest single-day rise since the markets crash on March 13, according to data source Chainalysis.
"Since Sept. 20, the net daily inflow of bitcoins to exchanges have been increasing and trade intensity has been declining," Philip Gradwell, an economist at Chainalysis, told CoinDesk.
Further, bitcoin's trade intensity, which measures the number of times an inflowing coin is traded, fell to a one-year low of 1.75 on Tuesday.
"There is a lot of inventory building on exchanges and fewer buyers willing to trade. These conditions tend to lead to price declines," Gradwell said.
Bitcoin fell by over 4.5% on Monday as investors bought the safe-haven U.S. dollar, but sold equities, gold and other fiat currencies on renewed coronavirus concerns.
While bitcoin may suffer deeper declines in the short-term, the overall bias remains bullish.
"We are still above $10,000, only the third time bitcoin has maintained this price level for multiple weeks, and long-term investors are buying bitcoin in increasing amounts," Gradwell noted.
The options market is also showing bullish bias on the longer time frames.
At press time, bitcoin is trading near $10,477, up slightly on the day, according to CoinDesk's Bitcoin Price Index.
Bitcoin Market Weakening After Macro-Based Sell-Off, On-Chain Data Suggests
Published on Sep 23, 2020
by Coindesk | Published on Coinage
Coinage
Mentioned in this article
Recent News
View All
Blockchain Bites: Bitcoin's Run, Uniswap's Hemorrhaging Value, Anchorage's Banking Bid
Bitcoin is nearing all-time highs in price and market cap last set three years ago.
Japan's megabanks to lead experiment with digital yen
We have, in order, Cheese Bank with a $3.3 million theft, Akropolis with its $2 million loss, Value DeFi with a whopping $6 million exploit and finally Origin Protocol's loss of $7 million.
Number of new Bitcoin addresses spikes amid growing FOMO
Japan's three largest banks, as part of a group of 30 private sector actors, are set to collaborate on an experiment with a digital yen.
Not just Wall Street: Quant trader explains why Bitcoin price is going up
Sam Trabucco, a quantitative trader at Alameda Research, believes four general factors are pushing up the price of Bitcoin.