The BTC price has been looking increasingly bullish so far this year, with the number one digital coin just surpassing the $10,000 mark for the 2nd time in a matter of days.
Increasing deposits at cryptocurrency exchanges across the world have formerly been an objective indicator of an impending market top. By this logic, it looks like most crypto investors aren’t looking to sell just yet.
Making a strong case for further Bitcoin upside is crypto research firm GlassNode which just released a metric analysis of BTC. The research firm points out in a twitter post that surging deposits have typically accompanied previous BTC market tops at cryptocurrency trading platforms.
A tendency change to the downside market top would need selling pressure to prevail over buying influence. Therefore, since many traders need to deposit to be able to sell their portfolios, GlassNode argues that deposits increase at times when BTC is overbought.
Things Look Increasingly Bullish for BTC
In the chart below, GlassNode displays a 7-day moving average of exchange deposits from the beginning of 2017 to the end of Jan. 2020. Overlaid is the BTC price.
The yellow segments represent local or universal market tops. As can be seen from the chart, exchange deposits did surge radically at each top during the period.
The indicator lines up with the June 2017 local top of nearly $3,000, the Sep. 2017 top of approximately $5,000, and the present unparalleled high of close to $20,000 in Dec 2017.
BTC deposits also increased at the time of the post-crash bounce that failed to break $10,000 during the 2018 trading period.
As per GlassNode’s analysis, deposits have been steadily dropping since the previous local top of $14,000 in July of last year. As the price has been trending upward in 2020 so far, there has been no noticeable upsurge in the volume of deposits reported across crypto exchange platforms.
“Not this time – there’s no indication that BTC is overvalued.”
BTC Price Looks to Continue Its Upward Trend
There are several factors behind the return of BTC optimism that has led to its continuing upward trend, other than just increased exchange deposits.
The imminent BTC halving this spring will see block rewards reduced to 6.25 BTC. This expected reduction in Bitcoin’s issuance has many crypto researchers enthusiastic, with some even making a case for a $100,000 BTC within less than two years after the third halving.
Likewise, the BTC hash rate has been snowballing, regardless of the BTC price. Close to the highest it has ever been this month, the rising investment in hardware and electricity shows a highly optimistic BTC mining industry.