Bitcoin saw a sharp recovery from $95,000 in the previous day as on-chain data showed whales were busy investing in the exchange.
Bitcoin Almost Fully Regains Its Christmas Gains
Bitcoin renewed hope among investors when it approached the $ 100,000 mark during the meeting before Christmas and Christmas Day, but the previous day, this asset decided to end these hopes as its price dropped.
From the chart, it can be seen that Bitcoin has now dropped to the $95,700 level, which is not much higher than the $94,100 mark that the asset was trading at before this rally.
The bearish price action may be completely unexpected considering what the on-chain data has been saying.
BTC Whales Has Made A Lot Of Exchange Money Lately
As noted by analyst Ali Martinez in a new post on X, the exchange received large deposits of Bitcoin last week. The index of compatibility here is the “Exchange Reserve,” which keeps track of the total amount of BTC sitting in the wallets of all central exchanges.
If the value of this metric increases, it means that the owners are generating income from these platforms. As one of the main reasons why investors use exchanges for trading purposes, this type of trend can have a bearish effect on the stock.
On the other hand, a declining index means that the outflow is full of income, and the total amount of assets is flowing into the wallets related to the exchange. Such a trend can be a sign that owners are accumulating, which would naturally be bullish for the price.
Now, here’s a chart from on-chain analytics company CryptoQuant shared by Martinez that shows the trend in the Bitcoin Exchange Reserve over the past few weeks:
Looks like the metric has registered a sharp jump in recent days | Source: @ali_charts on X
As shown in the graph above, the Bitcoin Exchange Reserve was falling during the price rally at the beginning of the month, which means that investors were buying and helping fuel.
This was not the case before and during the Christmas meeting, as the index showed a larger increase than that. In total, investors put 33,000 BTC into these platforms last week, worth about $3.15 billion at the current exchange rate.
Most of these deposits came in on Christmas Eve, as can be clearly seen in the chart. So, it seems that the whales were preparing to sell early, and when they thought the price had risen enough for Christmas, they pulled the trigger, resulting in a price drop.
The Bitcoin Exchange Reserve may now be worth watching, as any change in its graph would mean that investors feel that prices are low enough to buy again.
Featured image from Dall-E, CryptoQuant.com, chart from TradingView.com
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