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The neutralization of funding rates in perpetual cryptocurrency markets after the pullback suggests that the correction was healthy and that volatility could eventually decrease.
With Bitcoin halving just days away, the amount of BTC leaving centralized exchanges has reached levels not seen in over 15 months. At the same time, the number of BTCs that have not moved for over a year has decreased significantly.
According to the Bitfinex Alpha reportThis on-chain activity comes as Bitcoin recovers from a two-day slide that triggered a massive liquidation cascade over the weekend.
Increase in BTC exchange outflows
The net amount of BTC moving out of exchanges on April 12 was the highest since January 2023. Bitfinex analysts found that investors transferred 6,767 BTC on Friday, signaling a significant move into cold storage in anticipation of a potential rise prices after the halving. Conversely, the decline in inactive supply for over a year suggests that the market is at an inflection point.
Over the past month, long-term holders (those who have held their BTC for more than 155 days) have sold their assets at around 16,800 BTC per day. Analysts discovered a similarity between the current actions of BTC holders and those of December 2020, shortly before the market recorded a sharp rise.
Bitfinex said this trend is often a precursor to a market downturn and typically lasts around seven months. The trend suggests that this cycle could see a similar growth phase and that the market could be six months away from the BTC peak. However, this cycle may differ as prices have increased, with BTC recording a new all-time high ahead of the halving.
Notably, the supply of long-term holders gradually decreases before BTC reaches its peak.
Bitcoin recovering from weekend bloodbath
At the time of writing, BTC plane around $63,000, up slightly from its weekend low of $61,200. The market saw liquidations of more than $1.8 billion in long and short positions between Friday and Saturday in response to Iran's launch of drones and missiles against Israel.
However, the neutralization of funding rates in perpetual cryptocurrency markets after the pullback suggests that the correction was healthy and that volatility could eventually decrease. Bitfinex said Bitcoin's rebound to the $65,000 level subsequently indicated that the market had taken the decline in stride.
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