Bitcoin Deposits into Cryptocurrency Platforms Plummet to 2016 Figures
In recent developments, a significant decline in Bitcoin deposits to exchanges and the inflow-to-reserves ratio could potentially signal the start of a new bull market for Bitcoin. This trend, according to CryptoQuant analyst Alex Adler Jr., might indicate an upcoming Bitcoin rally.
The decrease in Bitcoin transfers to exchanges suggests that users are preferring to store their BTC in personal wallets rather than preparing to sell. This trend, as Adler points out, could signal an upcoming rally for Bitcoin.
Moreover, the current levels of the inflow-to-reserves ratio are reminiscent of the end of a bear market. When this ratio reaches its lowest levels, it often signals a shift in market sentiment towards a bullish outlook for Bitcoin.
Adler also highlights technical and sentiment indicators that might signal an upcoming rally. These include the 120-day simple moving average (SMA-120) pivoting upward and crossing the "zero axis," which historically signals a shift from bearish to bullish momentum when it holds above this level for multiple days. This technical breakout could restore trader confidence and mark the start of a multi-week rally.
Additionally, Adler notes that call option volume growth at near-term strike prices, such as the $130,000–$140,000 range, suggests bullish positioning. Holding key support levels like around $118,000 is crucial for confirming an optimistic scenario that could drive prices above $125,000 or even $130,000.
Furthermore, the absence of a "peak signal" in market metrics typically associated with major tops implies that the current rally may still have room to run before any major correction.
Earlier in December, analysts had warned about a possible deeper Bitcoin price correction before reaching a new all-time high. However, the current situation with the inflow-to-reserves ratio and deposit levels echoes a trend previously observed before major Bitcoin rallies.
The daily number of BTC deposits to exchanges in the final weeks of 2024 fell to 30,000, a significant drop from the 10-year average of 90,000. This current level is three times lower than the average, suggesting that experienced investors might be actively buying Bitcoin at lower prices.
In summary, factors signaling a possible Bitcoin rally beyond reduced exchange BTC deposits include an upward pivot and sustained hold of the SMA-120 above the zero axis, favorable macroeconomic outlooks, call option volume buildup and key price levels holding in the options market, and the lack of peak market top signals. These combined technical, derivatives market, and macro factors, as analyzed by Alex Adler Jr., suggest a constructive environment for Bitcoin price appreciation in the near term.
Crypto enthusiasts might be holding onto their Bitcoin instead of selling, as the decrease in Bitcoin transfers to exchanges suggests. This could indicate an upcoming rally for Bitcoin, as Adler suggests. Also, the current low levels of the inflow-to-reserves ratio, similar to the end of a bear market, might signal a shift in market sentiment towards a bullish outlook for Bitcoin.
