Key Points
- Bitcoin’s average exchange inflow/outflow ratio indicates strong buying pressure, suggesting a potential price increase.
- Despite a bearish trend in the derivatives market, Bitcoin’s NVT ratio shows the asset is undervalued.
Bitcoin’s [BTC] price experienced a significant drop last week, losing its bullish momentum. However, this trend may soon change as a key metric has reached a rarely seen level, indicating potential for a price increase.
Bitcoin Hits Critical Level
Over the past week, Bitcoin’s price has declined by more than 8%, with the cryptocurrency currently valued at $59,044 and a market capitalization exceeding $1.16 trillion. Crypto analyst Axel Adler Jr. recently shared analysis using Bitcoin’s average exchange inflow/outflow ratio. This metric suggests strong buying pressure, a signal that has only occurred six times in the past decade. Historically, when this metric indicates buying pressure, Bitcoin’s price has appreciated.
Potential for Trend Reversal
Analysis of data from Glassnode reveals that Bitcoin’s NVT ratio has dipped, typically indicating that an asset is undervalued and hinting at a potential price increase. Additionally, data from CryptoQuant shows that Bitcoin’s exchange reserves have been decreasing, suggesting increased buying pressure. However, the derivatives market paints a different picture, with a decline in Bitcoin’s funding rate and a dominant selling sentiment.
Technical indicators suggest that the bearish price trend may continue, with the MACD flashing a bearish crossover and the Relative Strength Index (RSI) moving sideways. However, the Chaikin Money Flow (CMF) offers a glimmer of hope for a trend reversal as it moves towards the neutral zone.
