Yerevan (CoinChapter.com) — Traders do not want to keep their Bitcoin on exchanges, and that is raising the flagship cryptocurrency’s prospect of retesting $60,000 soon.
On-chain analyst Willy Woo highlighted subsiding selling pressure in the Bitcoin market using a so-called Spot Exchange Net Flows indicator. In retrospect, the metric studies the Bitcoin inflow and outflow across all the major exchanges.
A higher SENF reading indicates that traders are depositing more cryptocurrency into their trading wallets. That shows their intention to trade Bitcoin for other assets shortly. Conversely, a lower SENF reading shows traders withdrawing their Bitcoin units from exchange wallets, confirming their likelihood of holding the tokens.
“The bearish exchange flows that were responsible for the “bottom of the dip” sell-off have now subsided,” Mr. Woo said in a note to clients. “Net flows at spot exchanges have just crossed over into the bullish region.”
The statements appeared just as Bitcoin rejected a downside attempt from bears earlier this week near newfound interim support near mid-$55,000s. The cryptocurrency was still trading more than 12 percent below its record high of around $65,000, awaiting a full-fledged bearish takeover but to no avail.
Weak Bitcoin Selling Pressure
Part of the reason sell-side remained cautious is Bitcoin’s growth as a mainstream asset. Prominent investors continued to highlight the cryptocurrency as a hedge against inflation caused by the Federal Reserve’s decision to maintain its expansionary policies until 2024.
Meanwhile, its acceptance across mainstream banking institutions, including JPMorgan & Chase, Morgan Stanley, and Goldman Sachs, as an investment alternative has further raised its prospect of climbing higher in the sessions ahead.
Mr. Woo noted that BTC’s recent sell-off is more a transfer of a valuable asset from weak hands to strong ones. The analyst also pointed that many traders sold their BTC holdings to seek opportunities in the booming altcoin market, highlighting the benchmark digital asset’s falling market dominance against its rivals.
“Should a trend reversal happen, the capital that went into alt-coin markets will return into the BTC network,” he added. “Bitcoin at $58k is cheap according to on-chain valuation metrics.”