Research shows Bitcoin is set to hit a new record high despite a sell-off near $50K

Bitcoin BTC cryptoquant kim young ju OTC
“Ascending Mount Aspiring” by Trey Ratcliff is licensed under CC BY-NC-SA 2.0

Key takeaways:

  • CryptoQuant research sees Bitcoin in the foothills of a new all-time high.
  • A disonnance between Bitcoin transfers and exchange inflow might signify a whale holding.

YEREVAN (CoinChapter.com) – Bitcoin has consolidated below the $50,000 price line for the past two weeks. However, it might be poised for a new rally, claims the research by blockchain analytics platform CryptoQuant. It is based on the Puell Multiple indicator cycles, which show how mining profitability influences the price action.

Bitcoin’s Puell Multiple cycles research

In hindsight, the ‘Puell Multiple’ indicators (PM) examine the fundamentals of miner behavior and how it can affect the market. PM is equal to the ratio of the daily coin issuance (in USD) to its 365-day moving average (in USD). If the PM is high, current miner profitability is high in comparison to the yearly average. Low values indicate the opposite.

The analysis compared the historical cycles of Bitcoin with Puell Multiple levels since 2011. As a result, a pattern emerged, which divided each cycle into four sequences.

The starting point is the first mid-cycle top post Halving onward.

explains the report.
Bitcoin 4-sequence cycles. Source: G a a h on Cryptoquant.com
Bitcoin 4-sequence cycles 2011-2013. Source: G a a h on Cryptoquant.com

The PM touches the yellow bar on the chart above when the prices make a mid-cycle top. The research points out that historically the end-of-cycle top only occurs when “Puell Multiple [hits] the red box.” The said pattern acts out in all the previous cycles.

Bitcoin 4-sequence cycles. Source: G a a h on Cryptoquant.com
Bitcoin 4-sequence cycles 2017-2021. Source: G a a h on Cryptoquant.com

That said, the research expects Bitcoin to follow through and rise to a new all-time high. The graph above shows that the alpha crypto is currently at the base of a possible uptrend that could take it to the red bar before the rally subsides into the second sequence of the cycle.

Meanwhile, Ki-Young Ju, the chief executive of CryptoQuant, pointed out another indicator that might confirm the bullish outlook. He spotted a dissonance between the total amount of Bitcoin transfers and the inflow into exchanges.

Also read: Bitcoin miners want to sell BTC for way above $50K, new analysis shows.

Are OTC deals back?

The executive tweeted two graphs, which show the Bitcoin transfer dynamic and the inflow to exchanges. While there is a clear spike on the token transfer graph, the coins in exchanges continue to decline.

Mr. Young Ju gives three possible explanations for the dissonance. One of them is the peak in OTC transactions (over the counter; bypassing exchanges). OTC deals are typical for whales and large transfers, as moving substantial amounts of BTC tokens through exchanges could disrupt the supply/demand balance in the liquidity pool.

Moreover, accumulation by large whales can lead to a price increase.

The same happened in early August, and a large amount of OTC deals contributed to an uptrend. But the upcoming sessions will show if the research presented above has merit and if the bullish prediction pans out.

Also read: Bitcoin OTC transactions mousetrap 99% of trade volumes—who is buying?

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