It must have been a very emotional week with Bitcoin dropping to $20,000. Even at one point, under the impact of Flashcrash and much bad news from the market, the price of Bitcoin fell to $18,000. This again raised questions about the market’s prolonged buying of copper.
Therefore, in this article, I will work with you to analyze and forecast the price of Bitcoin in the near future based on On-chain data.
Data on exchanges
Continuing with the trend like previous weeks, balances on exchanges continued to decrease and made new bottoms continuously.
Specifically, the amount of Bitcoin on exchanges is currently at about 2.39M BTC, down about 4.2% compared to the previous week on June 15, 2022.
from the beginning of 2022 until now. The number of Bitcoins on exchanges has decreased significantly, from 2.63M $BTC to only 2.39M $BTC, a decrease of approximately 10%. The amount of $BTC withdrawn during this period is approximately 245,000 $BTC, equivalent to about $5B (for $BTC = 20,430).
This is a supportive sign for Bitcoin’s bullish momentum again.
Bitcoin (BTC) Exchanges Netflow
On the 9th and 10th of the month (the day the Terra network crashed), there was a large amount of Bitcoin deposited onto the exchange (approximately 78,978 $BTC, approximately $2,448B) to sell off, causing the Bitcoin price to fall to the $30K price range. . These are also the 2 days we witnessed the largest net deposit volume since the beginning of 2022.
However, around that time, there were 3 days of net Bitcoin withdrawals from the exchange, with a huge amount of 30K $BTC on May 14, 23K $BTC on June 3, and most recently on June 17 with 58K $. BTC has withdrawn from the exchange.
In general, we can see that from the beginning of the year so far, the majority of Bitcoin has been withdrawn from the exchange. And especially at the current price (about $20,400), the demand to buy and withdraw $BTC from the exchange to bring it back to the storage wallet is very high.
Other on-chain metrics
The volume of Open Interest in the derivatives market has decreased significantly, showing that there are currently long/short positions in the Futures market.
In terms of Funding rate, you can see that the market is at a common level
The funding rate had a time as low as -0.01 when BTC fell from the support area of the price at $22k, $28k, then the market moved sideways for a few days, and the funding rate was positive again. Fluctuating at 0.007-0.08.
From the Cryptoquant data, we can conclude. The long side and the short side are very balanced. When the market crashes, the short has the majority to push the market price down (reflected by the negative funding rate). But when the market moves sideways at this stage, many people expect the price to recover, so the longs are outnumbered (positive funding rate). But in general, the number of open interests has decreased a lot. Therefore, the Derivatives market will not affect the current price of BTC too much => Current traders are quite hesitant to participate in the market.
The chart I use for analysis is Binary CDD, on this chart, if a blue line appears, it means that the CDD index is higher than the average at that time.
If the density of blue bars appears a lot, it means that the long-term holders are showing signs of selling and vice versa.
As you can see above, the long-term holders have sold out at the price range of about $20K-$30K quite a bit. The density of purple lines is as high as the period when the price of $BTC was at $64K-$65K. The recent arrival from the US side has weakened demand and led to a price correction.
Exchange whale Ratio
Looking at the Exchange Whale Ratio, we can see that the current trend is up, showing that there have been signs of profit-taking happening recently.
From January 2022 to April 2022. This number only fluctuates in the range of 0.37-0.52. However, from the end of April until now, this number has increased to about 0.45-0.65. There have been 3 times this index touched the 0.7 level. Specifically, on April 10, May 9, and June 4. This shows that the selling pressure from the Whale is quite large.
But when I checked the data on the amount of BTC net deposited/withdrawn on exchanges that day, the results were quite surprising.
Before the days when the Whale ratio increased sharply, most of the BTC was withdrawn from the exchange, except on May 9 and May 10, when a large amount of BTC was loaded onto the exchange. However, the amount of BTC withdrawn later is much larger than the amount deposited in the two days above.
=> Because the trading volume in the market is quite low, the whales do not need to sell too much BTC to fill up the BTC liquidity that day. Therefore, we see the Whale ratio increase even though there is not too much BTC deposited on the exchange.
The selling force coming from the whales is quite small but the demand is still not strong enough to keep the BTC price.
The last on-chain metric we need to consider is Miner Outflow.
This ratio has increased from about April to the present time. When $BTC fluctuated in the $40K zone and dropped to the $30K zone. This increase shows that miners are selling their $BTC.
An increase in this index is not necessarily a bad thing, because Miners are traders so they have to sell $BTC to pay for their mining costs as well as maintain the equipment. Besides
Although the amount of $BTC sold by miners is increasing. However, the Hash rate index continuously reached ATH. This shows that miners are selling $BTC to cover mining costs while reinvesting in machinery to mine more. Because of that, the Hashrate rate increases continuously.
Top Holders balance fluctuations
The addresses are holding from 1 BTC up to 10k BTC.
From March 2022 to the present time. The number of wallets each year holding 1 BTC, and 10 BTC began to increase. Shows that big wallets are buying a lot of BTC at the price range of $30k-$40K.
According to Glassnode. Currently, there are about 860K addresses holding over 1$BTC, about 148K addresses holding over 10$BTC and there are about 100 addresses holding over 10k $BTC.
To further analyze the top holders’ moves, I will track the current 3rd largest whale address 1P5ZEDWTKTFGxQjZphgWPQUpe554WKDfHQ. This address is holding about 121,391 $BTC (with a value of $2.7B).
From the beginning of May until now. This address collects BTC continuously in the amount of about 50 to 1000 $BTC each time. This address has had two BTC sales at $30K, for a total of 2000 $BTC (worth around $60M).
In the last 5 days, when BTC price fell to the $22K price area. Then this address has been buying continuously, each time buying on average about 300 $BTC (worth about $6.6M)
So, after analyzing the On-chain data about Bitcoin, I can give you some conclusions as follows:
- Based on the balance on the exchange, we see this number continue to decrease. In particular, the amount of BTC withdrawn in recent days has increased sharply. This shows that the action of collecting BTC and withdrawing to the wallet of investors is increasing.
- The derivatives market has almost cooled down, Open Interest has been falling continuously since the beginning of the year, and the funding rate is at a neutral level, in the near future Bitcoin price may not be subject to many strong pump dumps coming from the derivatives market.
- The whales and LTH have been selling at the sub-$30K area quite a bit. However, the current market is not very active and the trading volume is low, just a slight selling force from whales can cause the price to have a significant correction.
In my personal opinion, the market is quite bleak, the trading volume is very low so the whale may not be able to control some on-chain ratios, making the data noisy. However, in general, the amount of Bitcoin being traded on exchanges is very low. A positive sign for the upcoming bullish season.
However, is this a buy point or not? In my opinion “No”. The economic situation is still very unstable. The Fed will also raise interest rates between now and the end of the year to curb inflation, forcing companies to keep large amounts of money to pay interest. In addition, a lot of bad news was published around the market, causing investors to panic and flee, and the trading volume dropped significantly. So just a small amount of money can continue to dump the price of BTC.
I am still waiting for the market to stabilize, and the price starts to move sideways, showing the accumulation of investors. It is a good time to consider buying.
How about you? Do you think this is the right time to buy? If you have any questions, comments, suggestions, or ideas about the project, please email [email protected].
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.