The Bitcoin market continues to reflect a lot of uncertainty as the price shows little to no signs of recovery from the clear bearish trend established over the past two weeks. However, on-chain data has surfaced that puts into perspective the price movements of the flagship cryptocurrency and consequently what market participants can realistically expect.
Binance and other major exchanges witness capitulation
In a recent post on QuickTake on the CryptoQuant platform, analyst CryptoOnchain revealed drastic changes discovered on major exchanges involving Bitcoin trading. The relevant indicator here is the Bitcoin Taker Buy Ratio. It measures the ratio of buyer-initiated transaction volume to seller-initiated transaction volume. In this case, the analyst measured the taker buying ratio of Binance and “all exchanges” collectively.
A number higher than 0.5 means there are more buyers at the expense of a relative shortage of sellers. On the other hand, across the exchanges measured, the seller advantage is less than 0.5 points. As CryptoOnchain reported, the Bitcoin taker purchase ratio recently fell to a “multi-year low” of around 0.47. On Binance, the world’s largest cryptocurrency exchange, a Taker Buy Ratio below 0.5 is expected to support the overwhelming selling pressure reflected in the Bitcoin price.
What is interesting about this surge in selling pressure is how it follows the recent surge previously noted in exchange inflows. The analyst explains that a typical capitulation sequence begins with a “panic inflow,” a scenario in which investors rush to move their BTC holdings to exchanges. This is followed by aggressive selling, increasing bearish pressure on the price.
In general, if the market records such high sales volume, it means that market sentiment may be unstable. Regarding this, the analyst explained, “The dominance of aggressive sellers over buyers has reached its extreme.”
Bitcoin market outlook
The Bitcoin price is likely to fall further due to the bearish pressure currently dominating the market. The market appears to be struggling against this wave of supply.
However, CryptoOnchain again highlighted a known historical trend suggesting that these kinds of capitulation events, where markets drive out the underdogs, often occur before a market bottom is established. If history is anything to go by, the Bitcoin market could be nearing a price level where we start to see a significant bullish reversal.
For this to be possible, the analyst added the caveat that it would likely be on condition that the 0.5 level has been decisively recovered, especially if it occurs on a large exchange like Binance. As of press time, Bitcoin is worth about $106,900, with a modest but modest increase of 0.3% over the past day.
Featured image from Flickr, chart from Tradingview
editing process for focuses on providing thoroughly researched, accurate, and unbiased content. We adhere to strict sourcing standards and each page undergoes diligent review by our team of top technology experts and seasoned editors. This process ensures the integrity, relevance, and value of the content for readers.
