Bitfinex analysts have identified on-chain dynamics that suggest the crypto market’s correction phase is over, and investors have entered a re-accumulation phase, which precedes rallies.
According to the latest Bitfinex Alpha report, crypto investors are buying bitcoin (BTC) and ether (ETH) at an increasingly consistent pace. The market shift from consolidation to re-accumulation is evident in the behavior of BTC exchange-traded funds (ETFs) and the average transaction size on Bitcoin and Ethereum.
Consolidation Phase is Over
Following bitcoin’s rally to its all-time high of $73,700 in mid-March, long-term holders began to sell off their stash to realize profits. These moves led to an increase in BTC supply on the open market and a period of price correction that saw the cryptocurrency fall as low as $57,500.
During the consolidation period, which lasted several weeks from April, Bitcoin ETFs witnessed large outflows averaging $148 million per day. Analysts said the outflows marked a form of micro-capitulation period; however, they soon reversed.
With BTC sellers getting exhausted, buying has increased. U.S. spot Bitcoin ETFs have witnessed a resurgent buy-side demand, with daily net inflows averaging $136 million in the last two weeks. Despite Grayscale’s GBTC seeing substantial outflows, the funds have been on a 15-day inflow streak, buying more than four times the daily supply of Bitcoin miners.
BTC Exchange Reserves Plunge
Crypto investors’ pivot to re-accumulation is also seen in the increase in new accumulation addresses and the average transaction size of Bitcoin and Ethereum.
“Examining the accumulation addresses on both the Bitcoin and Ethereum networks, we see that, despite recent stable prices and modest growth for both assets, compared to previous months, there has been a noticeable increase in new accumulation addresses over the past month,” Bitfinex said.
The exchange’s analysts explained that the trend indicates that investor sentiment remains bullish despite stability in the prices of crypto assets. In addition, the estimated leverage ratio’s stability on these networks highlights a balanced market with minimal extreme risks.
Meanwhile, there has been a decrease in the Bitcoin exchange reserve, which tracks the amount of BTC held in exchange wallets. Crypto analysts consider a plunge in this metric bullish as it reduces the available supply of BTC, whereas a rise indicates more of the asset is available for sale. The decline began in February and has intensified recently as investors expect another price rally.
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