May 21, 2022

Quant Explains How This Bitcoin Crash Is Different From May’s

2 min read

A quant has actually described how the Bitcoin exchange reserve on-chain indicator differs in between the present crash which of May’s.

After Spiking Ahead Of The Crash, Bitcoin Exchange Reserves Have Resumed Downtrend

As described by an expert in a CryptoQuant post, the present trend in BTC exchange reserves is rather various from when the crypto crashed in May.

The “all exchanges reserve” is a Bitcoin indication that measures the overall quantity of coins presently provide in wallets of all exchanges.

If the metric’s value goes up, it implies financiers are depositing their coins to exchanges. Holders typically transfer their BTC to exchange wallets for withdrawing to fiat or for acquiring altcoins. Because of this, such a pattern might be bearish for the coin.

On the other hand, if the exchange reserve goes down, it suggests holders are withdrawing their Bitcoin to personal wallets. As financiers usually do this for hodling purposes, this kind of pattern can be bullish for the crypto.

Now, here is a chart that reveals the trend in the worth of the BTC exchange reserve around the May 2021 crash:

Bitcoin Exchange Reserve - May 2021

 The indicator dramatically rose around the May 2021 crash|Source: CryptoQuant As the above chart shows, Bitcoin exchange reserves were showing an uptrend since a while before the crash. After the rate decline, the sign

mostly moved sideways for months. Associated Reading|New Study Says Ethereum May Become A Better Inflation Hedge Over Bitcoin

Below is another chart, this time for the metric's present trend.

Bitcoin Exchange Reserve - December 2021

Looks like the reserves have actually been decreasing recently|Source: CryptoQuant According to this chart, the worth of the sign had been dropping off since a while. Nevertheless, right before the Bitcoin crash, the metric's value all of a sudden shot up.

But given that the rate crash, the reserves have actually once again come down, and looking set to resume the previous drop.

Associated Reading|Nayib Bukele Responds To Bank Of England's Bitcoin Criticism

This suggests that general, the reserves have actually been declining for a while now. This is where the existing market differs from that of May.

The quant believes that since of this pattern, Bitcoin is still bullish in the mid or the long term, unless the reserves flip upwards.

BTC Price

At the time of writing, Bitcoin's price drifts around $48.2 k, down 15% in the last 7 days. Over the previous month, the crypto has lost 21% in value.

The below chart shows the pattern in the rate of BTC over the last five days.

Bitcoin Price Chart

 BTC's cost has actually consolidated because the crash|Source: BTCUSD on TradingView

A couple of days back, Bitcoin's rate crashed down to $42k, before rapidly jumping back up to the present levels. However, ever since, the coin has disappointed any indications of healing as it has actually mainly moved sideways.

Included image from Unsplash.com, charts from TradingView.com, CryptoQuant.com