Exchange BTC Deposits to Hit Lowest Level in Three Years
Over the past six months in the digital industry, we have seen a sharp decrease in the number of deposits in bitcoins, which, in turn, suggests thoughts of an optimistic mood in the market.
On average, approximately 23,986 transfers are carried out during the week, and this number shows a sharp decline. At the moment, this is the lowest level since November 2016, and after reaching the peak, it reached 58,925 at the end of June 2019. the number has since increased to 27,289 on February 4.
It is also important to note the fact that starting from the second half of 2019, the number of deposits decreased by 60%. Even taking into account the factor of falling prices from 13,800 to 6,425 dollars, although it was during this period that investors preferred to attract their digital funds to exchanges, which did not happen this time.
Nicholas Pelekanos, Advisor to NEM Ventures, believes that a decrease in trading volumes and intra-network operations is an indicator of a not very healthy market in the short term.
“The discrepancy between the volume of transactions within the network and the increase in prices is usually a bearish signal,” Pelekanos told CoinDesk.
The price of bitcoin in January increased by 30 percent, increasing compared with the number of transfers to exchange addresses, which remained near the multi-year lows reached on January 1.
Although the number of transfers to exchanges has decreased, the number of transactions has recently increased along with the price. The average daily number of transactions increased from 290,200 January 6 to a three-month high of 324,745 on February 3.
The fact that investors piled up coins in January against the backdrop of a price rally suggests strong bullish sentiment among investors; if they doubted the sustainability of recent price increases, they would have moved their coins to exchanges to sell them at the market price, which would lead to an increase in exchange deposits.
Exchange deposits may rise after halving
In May 2020, Bitcoin will be halved for a fee in mining. The goal of this process is to curb inflation by reducing rewards for the block mined by 50 percent. When this happens, the block reward will drop to 6.25 BTC from the current 12.5 BTC.
Bitcoin chose a bet in anticipation of a reduction in supply. Cryptocurrency is currently trading at $ 9,400, which is 46 percent more than the December low of $ 6,425.
Connor Abendschein, a cryptocurrency research analyst at Digital Assets Data, expects exchange-traded deposits to rise if cryptocurrency prices continue to rise to half in the coming months. This is because some investors may decide to record profits, he said.