In simpler terms, when the funding rates in crypto perpetual markets returned to normal after a price drop, it indicated that the market correction was normal and potentially signaled a decrease in market volatility in the future.
As the Bitcoin halving approaches in the next few days, there’s been an increase in the amount of Bitcoin being withdrawn from centralized exchanges – a trend not observed for over 15 months. Meanwhile, the number of Bitcoins that have remained stationary for over a year has noticeably decreased.
Based on Bitfinex’s Alpha analysis, these on-chain actions occur as Bitcoin bounces back following a steep two-day decline that led to significant forced selling over the weekend.
BTC Exchange Outflows Surge
On April 12, the total amount of Bitcoin withdrawn from exchanges reached a peak since early January 2023. Bitfinex experts reported that investors moved approximately 6,767 BTC off exchanges on that Friday, indicating a significant shift to cold storage in preparation for potential price increases following the halving event. Meanwhile, the decrease in Bitcoin holdings inactive for over a year is indicative of a turning point in the market.
Over the past month, individuals holding Bitcoin for over 155 days have been selling approximately 16,800 Bitcoins each day. This trend recalls the behavior of Bitcoin investors back in December 2020, preceding a significant price surge.
Bitfinex has pointed out that this trend, which typically signals an approaching market slump and lasts approximately seven months, might be indicating a comparable growth phase for the current cycle. This means we might be around six months away from the peak of Bitcoin’s price. However, it is important to note that previous patterns may not exactly repeat themselves, as Bitcoin has set a new all-time high prior to its halving event.
Notably, long-term holder supply gradually falls before BTC reaches its peak.
Bitcoin Recovers From Weekend Bloodbath
Currently, Bitcoin was priced at approximately $63,000 during my writing, representing a slight increase from its weekend low of $61,200. The market underwent significant liquidations totaling over $1.8 billion in both long and short positions, triggered by Iran’s attack against Israel involving drones and missiles on the weekend.
After the price drop in crypto perpetual markets, the equalization of funding rates suggested that the correction was normal and potentially signaled a decrease in future volatility. Bitfinex explained that Bitcoin’s bounce back to $65,000 indicated that the market had handled the sell-off calmly.
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2024-04-16 21:40