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Bitcoin Leverage Ratio Hits New ATH, Is More Price Decline Coming?

by NEWSBTCDecember 27, 2021

On-chain data shows Bitcoin leverage ratio has hit a new all-time high (ATH). This may mean that a price correction could soon follow.

Bitcoin Leverage Ratio Reaches New Highs, Correction Incoming?

As pointed out by an analyst in a CryptoQuant post, the BTC leverage ratio has made a new ATH recently. This increases the possibility of a correction happening soon to flush out all the excess leverage.

The “all exchanges estimated leverage ratio” is an indicator that estimates how much leverage is used by Bitcoin investors on derivatives exchanges, on average.

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There are two related metrics here. The first is the “open interest,” which measures the total amount of futures contracts currently open in the market. And the other is the “exchange reserve” that tells us how much BTC is stored in derivatives exchange wallets.

The value of the leverage ratio is calculated as the open interest divided by the exchange reserve. With the help of this metric, it becomes possible to tell whether investors are currently taking low risk or high risk.

When the value of the indicator rises, it means investors are taking on more leverage. High values of the metric may mean the market is currently over-leveraged, which could lead to higher volatility in Bitcoin.

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Related Reading | Quant Explains How Large Bitcoin Leverage Ratio Can Help Turnaround Price

On the other hand, low values of the indicator imply there isn’t much leverage in the market right now. Here is a chart that shows the trend in the BTC leverage ratio over the past few months:

Looks like the indicator has recently hit a new ATH | Source: CryptoQuant

As you can see in the above graph, the Bitcoin leverage ratio has been on the rise lately. Just recently the metric also achieved a new all-time high.

Related Reading | Growth Of Bitcoin ETFs & Other Instruments Doesn’t Support Supply Shock Narrative

The quant believes that such high values of the ratio may mean that a correction in the price of the coin could soon come, wiping away all the excess leverage with it.

BTC Price

At the time of writing, Bitcoin’s price floats around $50.9k, up 11% in the last seven days. Over the past thirty days, the crypto has stacked 6% in losses.

The below chart shows the trend in the price of BTC over the last five days.

BTC's price surged up a few days ago, but has since moved sideways | Source: BTCUSD on TradingView

Bitcoin has established a footing above the $50k price level in the past few days, but it’s unclear at the moment when the coin might retest higher levels. If the leverage ratio is anything to go by, another correction might soon wipe away this recovery instead.

Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com

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Bitcoin Bearish Signal: Exchange Reserves Show Sharp Increase

by NEWSBTCDecember 2, 2021

Bitcoin exchange reserves have shown a sudden sharp spike recently, despite being in a declining trend for months.

After Months Of Downtrend, Bitcoin Exchange Reserves Shoot Up

As pointed out by a CryptoQuant post, on-chain data shows that BTC exchange reserves have spiked up in the past couple of weeks.

The “all exchanges reserve” is an indicator that measures the total amount of Bitcoin stored in wallets of all exchanges at a particular point in time.

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If the value of the metric goes down, it means investors are taking their coins off exchanges. Holders may be withdrawing their BTC to accumulate them as they might believe that the price would appreciate further. As a result, this trend could be bullish for the crypto.

On the other hand, if the indicator increases in value, it implies holders are transferring their Bitcoin to exchanges, possibly for withdrawing to fiat or for purchasing altcoins. Such a trend can prove to be bearish for the coin.

Related Reading | Bitcoin Open Interest Remains Elevated Post Dramatic Dip

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Now, here is a chart that shows the trend in the BTC exchange reserves over the past few months:

The indicator seems to have spiked up recently | Source: CryptoQuant

As you can see in the above graph, the Bitcoin exchange reserves have been falling down for a while now. However, in the past couple of days, the indicator’s value has shown a sudden increase.

This rise in the reserve amounts to around 39k BTC being deposited to exchanges between yesterday and today alone.

Related Reading | The Bitcoin Saga: A Look At BTC’s History Of Up’s And Down’s

Such sharp trend is usually an indication of whale activity. The price of Bitcoin has struggled recently so it’s possible some institutional investors could be preparing to pull out from the market.

If it’s indeed a sign of whale dumping, then the outlook of the crypto’s price could be bearish at least in the near future.

BTC Price

At the time of writing, Bitcoin’s price floats around $56.4k, down 2% in the last seven days. Over the past month, the crypto has lost 8% in value.

The below chart shows the trend in the price of the coin over the last five days.

BTC's price has mostly consolidated in the past few days | Source: BTCUSD on TradingView

Over a week ago, Bitcoin had a crash triggered by fud from the Omicron COVID variant. The coin’s price dropped to as low as $53k, but a few days ago the coin recovered its losses.

However, since then, the crypto has mostly trended sideways. It’s unclear at the moment which direction the coin might break out of this consolidation, but if the exchange reserve is anything to go by, BTC might face bearish trend soon.

Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com

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Tagged : #BTC / All News / Bitcoin / Bitcoin Bearish / Bitcoin Exchange Reserve / Bitcoin Whales / BTCUSD

Bitcoin Turning Bearish? Leverage Ratio Shows Sell Signal

by NEWSBTCSeptember 7, 2021

The Bitcoin leverage ratio is showing a sell signal right now, indicating that the market could turn bearish, at least in the short term.

Bitcoin Leverage Ratio Says Not A Good Time To Buy Right Now

As pointed out by a CryptoQuant post, the estimated leverage ratio indicates that this might not be the best time to buy BTC.

The all exchanges estimated Bitcoin leverage ratio is an indicator that’s calculated by taking the ratio of open interest divided by the reserves of all exchanges.

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Estimated Leverage Ratio = Open Interest ÷ Amount of Reserve

For those unfamiliar with futures trading, the “open interest” refers to the total number of contracts held by users at the end of a trading day. The all exchanges reserve is naturally the total amount of Bitcoin held in wallets of all exchanges.

The leverage ratio indicator can show how much leverage is used by a trader on average. When the value of the metric goes up, it means traders are becoming increasingly confident in their positions.

Related Reading | New To Bitcoin? Learn To Trade Crypto With The NewsBTC Trading Course

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Similarly, a downtrend in the value of the indicator implies the opposite. With the help of these trends, it becomes possible to know whether traders are taking a high risk or a low risk.

Now, here is how the latest chart for the Bitcoin leverage ratio looks like:

The BTC leverage ratio slightly moves up | Source: CryptoQuant

As the above graph shows, the movement of the indicator can be used to tell where the BTC price might head next.

Related Reading | As Crypto Market Goes Into “Extreme Greed,” Is Bitcoin Set For New All-Time High?

The leverage ratio moving down usually signals a good buying spot, while its value going up has suggested otherwise throughout the year.

Presently, the metric’s value is moving upwards, meaning it’s not a good time to buy more Bitcoin, and the coin could be observing a short-term correction soon.

BTC Price

At the time of writing, Bitcoin’s price is around $50.9k, up 6% in the last 7 days. Over the past month, the crypto has gained 13% in value.

The below chart shows the trends in the price of the coin over the last three months:

Bitcoin plunges down | Source: BTCUSD on TradingView

After struggling just below the $50k price range for a while, BTC seems to have finally gained some solid ground above the mark.

Yesterday, Bitcoin almost reached $53k in a sharp move up, but has since fallen off drastically as the price now floats below $51k.

If the leverage ratio is anything to go by, BTC could turn bearish and see some downtrend trend soon. However, it’s likely to be only a short-term correction as other indicators still show that the crypto is bullish in the long term.

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Tagged : #BTC / All News / Analysis / Bitcoin / Bitcoin Bearish / BTCUSD

Bitcoin Turns Bearish As Whales Sell-Off On Gemini

by NEWSBTCAugust 12, 2021

On-chain data may suggest huge Bitcoin inflows to crypto exchange Gemini might be the reason behind the recent dip.

Huge Bitcoin Inflows To Crypto Exchange Gemini

As pointed out by a CryptoQuant post, these BTC inflows to Gemini might be the reason for the current downwards trend in the crypto’s price.

The Bitcoin inflow is an indicator that shows the amount of BTC transferred into exchange wallets. The opposite metric is called the outflow.

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The difference between the inflows and outflows gives the exchange netflow. When this indicator’s value is positive, it means inflows are outweighing outflows.

While on the otherhand, if the netflow is negative, it implies more Bitcoin is moving out of exchanges than in. Now, here is a chart for the BTC Gemini netflow:

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Gemini received huge inflows shortly before the price dip | Source: CryptoQuant

As the graph shows, the BTC price started moving down as soon as Gemini started noticing negative spikes in the netflow.

The reason behind the dip is that big inflows mean whales are sending their coins to the exchange for selling purposes/altcoin purchasing.

Related Reading | S2F Creator Beckons Beginning Of Second Leg Of Bitcoin Bull Run

However, as the graph shows, big inflows aren’t the only necessary condition for the price to go down. There are two other indicators that influence the price, namely the BTC spot reserves and the stablecoins issued metric.

The spot reserves is the total amount of Bitcoin in wallets of all exchanges. If the value of this indicator moves up, it means exchanges across the board are noticing large inflows.

On the contrary, if the spot reserves move down, it means exchanges are overall observing higher outflows. Looking at the above chart, spot reserves moving up seems to cause a drop in the price, as expected.

Related Reading | Could The New “China Model” Be The Reason The Country Banned Bitcoin Mining?

The graph also shows that if Gemini receives large inflows while the spot reserves go down, the price isn’t negatively affected. Similarly, large amounts of stablecoins being issued also seems to cause a similar effect.

BTC Price

At the time of writing, Bitcoin’s price is around $44k, up 8% in the last 7 days. Over the past month, the cryptocurrency has amassed 34% in gains.

Below is a chart showing the changes in the coin’s value over the past three months:

BTC's price seems to be crashing down | Source: BTCUSD on TradingView

After peaking not too far from the $47k price mark, Bitcoin seems to be sharply moving downwards. As explained above, this could be related to the inflows to Gemini.

Some signs still seem to be bullish for the crypto so it’s hard to say which direction it will go in next. However, if such inflows continue, there could be a bear market ahead.

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Tagged : #BTC / All News / Bitcoin / Bitcoin Bearish / BTCUSD / China / Gemini Bitcoin Exchange