CryptocurrencyBitcoin Derivatives Exchange Reserve Surges Up As BTC Continues...

Bitcoin Derivatives Exchange Reserve Surges Up As BTC Continues To Plunge


On-chain data shows the Bitcoin reserve of derivative exchanges has surged up recently as the price of the crypto has continued to crash down.

Bitcoin Derivatives Exchange Reserve Observes Sharp Uptrend

As explained by an analyst in a CryptoQuant post, the crashing BTC price may be forcing whales and long-term holders to open short positions in order to hedge their portfolios.

The “derivative exchange reserve” is an indicator that measures the total amount of Bitcoin currently present on wallets of all derivative exchanges.

When the value of this metric goes up, it means coins are entering into derivative exchanges right now. Such a trend may mean investors are opening leveraged positions at the moment, which can result in higher volatility in the value of the crypto.

On the other hand, a downtrend in the indicator implies investors are withdrawing their coins from these exchanges currently.

Now, here is a chart that shows the trend in the Bitcoin derivative exchange reserve over the past year:

Bitcoin Derivative Exchange Reserve

The EMA 7 value of the metric seems to have observed some uptrend recently | Source: CryptoQuant

As you can see in the above graph, the Bitcoin derivative exchange reserve had been heading down for quite a while, until recently when the indicator’s value once again started rising up.

Recent data suggests that the crash in the coin’s price has pushed around 50% of the total BTC supply into loss. Based on this, many long-term holders and whales are also bound to be underwater right now.

Related Reading | Bitcoin Breaches $19K Level – Will Selloff Continue? What’s The Next Bottom?

The quant believes that the uplift in the derivative reserve is because of these long-term holders and whales panicking about their portfolios losing value.

These holders are looking to hedge their portfolios and reduce risk by opening short positions on derivative exchanges.

The analyst points out, however, that such aggressive shorting would create even more selling pressure, causing the price to see further drawdown.

Related Reading | Bitcoin Long-Term Holders Now Own Nearly 80% Of Realized Cap

But another possibility also arises from this situation, and that would a huge short squeeze. A lot of demand and a sudden reversal in the price of Bitcoin will need to occur before such an event can take place.

The quant thinks it may take more time and further decline in the value of the crypto for the correct conditions to align for it.

BTC Price

At the time of writing, Bitcoin’s price floats around $19.3k, down 29% in the last seven days. Over the past month, the crypto has lost 33% in value.

Bitcoin Price Chart

Looks like the value of BTC has rebounded back a little after a dip below $18k | Source: BTCUSD on TradingView
Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com



Original Source Link

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Latest News

Laura Loomer Must Pay CAIR and CAIR Florida Nearly $125K in Attorney Fees

From Illoominate Media, Inc. v. CAIR Florida, Inc., decided today by Judges Charles Wilson, Britt Grant, and R....

The biggest (and little known) change to Oregon housing law

In 2019, the Oregon Legislature passed House Bill 2001 – the "middle housing" law. This new law will...

Emily Ratajkowski Wore A Jean Jacket With Nothing Underneath In Paris – Hollywood Life

View gallery Emily Ratajkowski, 31, has been spotted wearing the hottest looks all over Paris during the city’s fashion...

Must Read

Lessons for Truss when economic orthodoxy bites back

The disdain for economic orthodoxy was dripping from...

S&P puts UK credit rating on notice with ‘negative outlook’

The UK’s credit rating was threatened with a...
- Advertisement -

You might also likeRELATED
Recommended to you