A historical data analysis of an indicator on the chain could show that Bitcoin might not be at imminent risk of another crash.
Bitcoin Exchange Addresses Have Very Low Values
As pointed out by an analyst in a CryptoQuant post, signs are that another crash similar to Q3 2018 isn’t likely to happen currently.
The relevant indicator here is the “spot exchange depositing addresses,” which is a measure of the total number of Bitcoin wallet addresses that are making send transactions to centralized spot exchanges right now.
Investors deposit coins to spot exchanges in order to sell them. A spike in this indicator can indicate dumping behaviour from large numbers of addresses and could bear down on the crypto’s price.
However, low prices indicate that not enough holders are selling the stock at this time.
Below is a graph that illustrates the change in Bitcoin spot-exchange depositing addresses over time:
It seems like the metric's value has fallen in recent months. Source: CryptoQuant| Source: CryptoQuant
The graph above shows that the quant marked the trend zones for Bitcoin spot exchange depositing addresses.
This seems to be the case most often around times when this indicator is sharply rising up to local tops. The price of BTC also has seen a peak and then declined.
Spot exchange deposits addresses are slowly declining since the peak of the bull market last year. There have only been a few peaks.
Bitcoin investors are wondering if there will be another steep drawdown in Bitcoin’s near future. This is similar to the 2017 bear market, which saw a sharp decline after months of similar sideways movements.
Looking at the chart for the trend during the 2017/2018 cycle, it’s apparent that the metric declined following the bull run top and then plateaued at low levels as the bear market went on.
In Q3 2018, however, the indicator began to rise. The price crashed a few months later.
Analyst believes that there are no signs of a significant decline in this indicator as there have been few increases over the past weeks.
BTC price
At the time of writing, Bitcoin’s price floats around $18.8k, down 4% in the last week.
Crypto seems to be losing value again below $19k | Source: BTCUSD on TradingView
Featured image from André François McKenzie on Unsplash.com, charts from TradingView.com, CryptoQuant.com