Quant says that some Bitcoin indicators are showing the same trend as in the fourth quarter of 2020, indicating that BTC could take a similar move higher.
Bitcoin Netflow and Stablecoin Supply Ratio Trends Look Similar to Q4 2020
As one analyst explained in a CryptoQuant post, BTC: netflow and stablecoin supply ratio are trending similarly to what happened during the last quarter of 2020.
The Bitcoin Net Flow indicator shows the net number of coins entering or leaving the exchanges. Its value is calculated by taking the difference between the outflows and inflows.
When the meter notices positive values, it means that exchanges are seeing more inflows than outflows, and therefore more investors have started sending their bitcoins to exchanges for selling purposes.
Likewise, negative values mean just the opposite; Investors withdraw their bitcoins from exchanges either to accumulate in personal wallets or to sell them through OTC deals.
Another related metric is the stablecoin supply ratio, which is defined as the market capitalization of BTC divided by the market capitalization of all the stablecoins.
When the index values are at the lower end, it means that there is an abundant supply of stablecoins in the market. High supplies could indicate a possible bullish trend in the market as investors use these coins to pick up other cryptocurrencies such as BTC.
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On the other hand, higher ratio values indicate a lower supply of stablecoins, which means that there is no buying pressure in the market. This could lead to a possible downtrend or sideways movement for BTC.
Now, here is a chart showing the trend of these two Bitcoin indicators against the price:
The similarity between Q4 2020 and the current period | Source: CryptoQuant
As the above chart shows, net flows seem to have been negative for a while now and the stablecoin supply ratio is also assuming low values.
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This trend appears to be similar to what it was during the fourth quarter of 2020. What followed was a massive bullish rally, so Quantum believes we might see BTC explode similarly soon.
At the time of writing, the price of Bitcoin is hovering around $43,000, down 2% in the past seven days. Over the past month, the cryptocurrency has lost 9% of its value.
Over the past few days, BTC only showed sideways movement as the crypto failed to move above $45,000. The chart below shows the currency price trend over the past five days:
BTC's price continues to consolidate between the $40k and $45k levels | Source: BTCUSD on TradingView
Featured image from Unsplash.com, charts from CryptoQuant.com, TradingView.com