Bitfinex: Consolidation phase in the crypto market is over
Analysts at Bitfinex have pinpointed signs within the on-chain metrics indicating that the cryptocurrency market's downtrend may have concluded, transitioning into a re-accumulation stage which typically sets the stage for future price surges.
The most recent insights from the Bitfinex Alpha report unveil a pattern of steadily increasing purchases of bitcoin (BTC) and ether (ETH) among crypto investors. This transition from a phase of market stabilization to one of re-accumulation is marked by changes in the activities surrounding BTC exchange-traded funds (ETFs) and the average size of transactions on both the Bitcoin and Ethereum networks.
End of the Consolidation Period
After a significant surge that propelled bitcoin to a record peak of $73,700 around mid-March, long-standing investors initiated a wave of sell-offs to capitalize on their profits. This sequence of events contributed to an augmented supply of BTC in the marketplace and led to a price adjustment phase where the digital asset's value dipped to $57,500.
Throughout the consolidation phase, which extended for several weeks starting in April, there was a notable decrease in Bitcoin ETFs, with daily outflows averaging at $148 million. Experts interpreted these outflows as a minor capitulation phase, which eventually saw a reversal.
As the selling pressure on BTC alleviated, there was a noticeable uptick in purchasing activity. In the U.S., spot Bitcoin ETFs have experienced a resurgence in buying interest, with daily net inflows hitting an average of $136 million in the fortnight prior. Despite experiencing significant withdrawals, Grayscale’s GBTC has been on a 15-day consecutive buying spree, acquiring over fourfold the daily output of Bitcoin mining operations.
Decline in BTC Exchange Reserves
The shift towards re-accumulation among crypto investors is further evidenced by an uptick in new accumulation addresses and the average transaction sizes for both Bitcoin and Ethereum.
The analysis from the exchange's experts suggests that the investor mood remains optimistic about the future of cryptocurrency prices. Moreover, the constant stability of the estimated leverage ratio across these networks underscores a market that is well-balanced, devoid of significant risk extremities.
In the meantime, there's been a notable reduction in the Bitcoin exchange reserve, a metric that accounts for the quantity of BTC stored in exchange wallets. Analysts view a downturn in this indicator as a positive signal, as it constricts the circulating supply of BTC, whereas an upswing suggests a larger availability of the asset for sale. This downward trend kicked off in February and has markedly intensified lately, fueling anticipations of an impending price rally.
