Bitcoin Transactions on Exchanges Drop Below 200-Day Average; Bullish?

Bitcoin transaction volumes on cryptocurrency exchanges all across the world have dropped below their 200-day moving average, according to data shared by Rafael Schultze-Kraft, the CEO/co-founder of blockchain analytics platform Glassnode.

The plunge in trade activities largely coincided with a rise in Bitcoin withdrawals, increasing stablecoins deposits, and an increase in the number of active Bitcoin addresses. In doing so, the cost to purchase one Bitcoin climbed by almost 1,000 percent, hitting a record high near $42,000 in early January from its mid-March nadir of $3,858.

Many analysts agreed that the on-chain metrics pointed to a spike in “HODLing sentiment,” a slang common among cryptocurrency investors who believe “holding” bitcoin is a better long-term strategy than trading it actively for other assets based on intraday trends.

In January only, crypto addresses holding more than 1,000 BTC has surged by 11 percent, another Glassnode data shows. It represents a spike in the number of whales, a commonly used term for large-cap cryptocurrency holders.

The month-to-date performance for BTC/USD in the same timeframe was 12.66 percent.

Bitcoin OTC Deals

Data fetched by CryptoQuant, a South Korea-based cryptocurrency exchange, showed an increase in Bitcoin outflow from Coinbase Pro, a US-based regulated cryptocurrency exchange that serves as a primary gateway for institutional investors to gain physical exposure to Bitcoin.

CryptoQuant’s CEO Ki-Young Ju noted that Coinbase typically transfers larger BTC amounts from its Pro wallets to custodian addresses, claiming that they represent expansive over-the-counter deals. Most recently, the exchange deposited about 15,000 BTC at an average rate of $37,143 to the so-called OTC wallets.

That followed a major increase in BTC/USD rates as they crossed above $40,000.

Bubble Woes

As its on-chain indicators points to a bullish bias, Bitcoin’s uptrend risks pausing against the headwinds of unsupportive short-term indicators.

Investors have lately withdrawn themselves from safe-haven assets and are moving into the risk-on stock market. The move appears due to a better-than-expected economic outlook for the United States in 2021. That has raised the appetite for Wall Street stocks and the US dollar. As a result, yields on the long-dated Treasuries are rising.

Bitcoin has a history of trading inversely to yields (long-term) and dollar (medium-term). The cryptocurrency’s recent sell-off above the $40,000-level points to profit-taking by same traders who see it paring gains against a stronger US economic outlook.