Bitcoin Derivatives Exchange Reserve Surges Up As BTC Continues To Plunge
19 Junio 2022 - 02:00PM
NEWSBTC
On-chain data shows the Bitcoin reserve of derivative exchanges has
surged up recently as the price of the crypto has continued to
crash down. Bitcoin Derivatives Exchange Reserve Observes Sharp
Uptrend As explained by an analyst in a CryptoQuant post, the
crashing BTC price may be forcing whales and long-term holders to
open short positions in order to hedge their portfolios. The
“derivative exchange reserve” is an indicator that measures the
total amount of Bitcoin currently present on wallets of all
derivative exchanges. When the value of this metric goes up, it
means coins are entering into derivative exchanges right now. Such
a trend may mean investors are opening leveraged positions at the
moment, which can result in higher volatility in the value of the
crypto. On the other hand, a downtrend in the indicator implies
investors are withdrawing their coins from these exchanges
currently. Now, here is a chart that shows the trend in the Bitcoin
derivative exchange reserve over the past year: The EMA 7 value of
the metric seems to have observed some uptrend recently | Source:
CryptoQuant As you can see in the above graph, the Bitcoin
derivative exchange reserve had been heading down for quite a
while, until recently when the indicator’s value once again started
rising up. Recent data suggests that the crash in the coin’s price
has pushed around 50% of the total BTC supply into loss. Based
on this, many long-term holders and whales are also bound to be
underwater right now. Related Reading | Bitcoin Breaches $19K
Level – Will Selloff Continue? What’s The Next Bottom? The quant
believes that the uplift in the derivative reserve is because of
these long-term holders and whales panicking about their portfolios
losing value. These holders are looking to hedge their portfolios
and reduce risk by opening short positions on derivative exchanges.
The analyst points out, however, that such aggressive shorting
would create even more selling pressure, causing the price to see
further drawdown. Related Reading | Bitcoin Long-Term Holders
Now Own Nearly 80% Of Realized Cap But another possibility also
arises from this situation, and that would a huge short squeeze. A
lot of demand and a sudden reversal in the price of Bitcoin will
need to occur before such an event can take place. The quant thinks
it may take more time and further decline in the value of the
crypto for the correct conditions to align for it. BTC Price At the
time of writing, Bitcoin’s price floats around $19.3k, down 29% in
the last seven days. Over the past month, the crypto has lost 33%
in value. Looks like the value of BTC has rebounded back a little
after a dip below $18k | Source: BTCUSD on TradingView Featured
image from Unsplash.com, charts from TradingView.com,
CryptoQuant.com
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