Under significant selling pressure for some time, the biggest cryptocurrency Bitcoin (BTC) is trading at $26,748 with a market cap of $518 billion, reflecting a 2.32% decrease over the past 24 hours. Over the past few weeks, weekly trading volumes for BTC and altcoins have hit historical lows. Despite the confusion surrounding Bitcoin’s trajectory from this point, on-chain data signals a glimmer of optimism.
Bitcoin’s Sell-Side Risk Ratio at All-Time Low
According to Checkmate, lead analyst at on-chain data platform Glassnode, Bitcoin‘s sell-side risk ratio has dropped to an all-time low (ATL). This indicates that investors are reluctant to spend their Bitcoins at current price ranges, either for profit or at a loss. Typically, such a situation occurs when sellers on both sides are exhausted, suggesting major price movements may be on the horizon.
Moreover, on-chain data from Glassnode suggests that an increase in volatility is likely, due to a decrease in transaction volumes and liquidity across the cryptocurrency market. The data platform noted, “Given the tightening of price ranges and on-chain transfers at the lowest levels of the cycle, it’s unlikely that BTC will remain stationary for much longer.”
Glassnode also reported that large BTC inflows to cryptocurrency exchanges are at a cyclical low of $1.65 billion. This represents the lowest value seen since the beginning of the primary bull market. Such a severe contraction in BTC inflows to crypto exchanges typically indicates extremely low structural market liquidity.
BTC Inflows to Cryptocurrency Exchanges
The most probable reason for this seems to be that large market makers, like Jane Street and Jump Crypto, have recently decided to exit the U.S. market citing regulatory clarity issues. Glassnode added, “In an increasingly illiquid market, with very thin order books, the probability of market volatility is greatly increasing.”
Following a strong rally earlier this year, Bitcoin failed to break the $30,000 level. It will be interesting to see whether the largest cryptocurrency, which has been under selling pressure since then, will manage to stay above $27,000 or fall further.
