On-chain data shows Bitcoin exchange reserves have sharply increased in value, a sign that the selloff may not be over yet.
Bitcoin Exchange Reserve Observes Rapid Rise
As pointed out by an analyst in a CryptoQuant post, a high number of coins have entered exchanges over the last day.
The “exchange reserve” is an indicator that measures the total amount of Bitcoin currently present in the wallets of all centralized exchanges.
When the value of this metric goes up, it means the supply on exchanges is going up as investors are depositing a net number of coins.
As holders usually transfer to exchanges for selling purposes, such a trend could be bearish for the price of the crypto.
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On the other hand, a declining value of the reserve suggests investors are withdrawing their coins at the moment. This kind of trend, when prolonged, can be a sign that holders are accumulating, which could prove to be bullish for the coin’s price.
Now, here is a chart that shows the trend in the Bitcoin exchange reserve over the past few months:
Looks like the value of the metric has jumped up recently | Source: CryptoQuant
As you can see in the above graph, the Bitcoin exchange reserve has observed a sharp increase in its value recently.
The chart also shows the curve for the “all exchanges netflow,” another metric which measures the net amount of coins entering or exiting exchanges.
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Basically, this metric tells us about how much the reserve is increasing or decreasing right now. As expected, its value also shot up over the last few days.
The fact that the Bitcoin exchange reserve does not seem to have changed trend and is still rapidly rising after the crash may mean that the crypto’s price could see further decrease in its value in the near future.
At the time of writing, Bitcoin’s price floats around $ 21.1k, down 30% in the last seven days. Over the past month, the crypto has lost 32% in value.
The below chart shows the trend in the price of the coin over the last five days.
The price of BTC seems to have ben moving sideways since the crash | Source: BTCUSD on TradingView
Following the crash, Bitcoin touched as low as $ 20k, before rebounding back a little to the current levels. Currently, it is unclear whether the carnage has ended, or if further decline is coming.
But if the exchange reserve is anything to go by, then signs are not looking in the crypto’s favor.
Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com