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The Bitcoin market continues to reflect great uncertainty as the value shows little to no signs of recovery from the apparent bearish trend seen over the past two weeks. However, on-chain data has emerged that puts the flagship cryptocurrency's price performance into perspective and shows what market participants can realistically expect because of this.
Binance and other major exchanges are experiencing capitulation
In a recent QuickTake post on the CryptoQuant platform, analyst CryptoOnchain revealed a drastic change observed across major exchanges involved in Bitcoin transactions. The relevant indicator here is the Bitcoin Taker Buy Ratio, which measures the proportion of trading volume initiated by buyers to the quantity of transactions initiated by sellers. In this case, the analyst measured the taker buy ratio on Binance and that on “All Exchanges” as a collective.
A price above 0.5 indicates the presence of more buyers versus a relative scarcity of sellers. On the opposite hand, values below 0.5 points indicate the predominance of sellers on the exchange being measured. As CryptoOnchain reported, the Bitcoin Taker Buy Ratio recently fell to a “multi-year low” of around 0.47. On Binance, the world's largest crypto exchange, it is evident to see that a taker-buy ratio below 0.5 is more likely to support the overwhelming selling pressure that’s impacting the value of Bitcoin.
What is interesting about this increase in selling pressure is the way it follows the recent increase in forex inflows noted previously. The analyst explains that the completion of a typical capitulation sequence begins with “panic inflows,” a scenario by which investors rush to maneuver their BTC holdings to exchanges. Afterwards, aggressive selling occurs, adding downward pressure on the value.
When the market sees such high volumes, it often signifies that market sentiment could possibly be in a state of fear. Accordingly, the analyst explained that “the dominance of aggressive sellers over buyers has reached an extreme point.”
Bitcoin market outlook
Currently, there may be a high probability that the bearish pressure prevailing out there could drive the Bitcoin price further lower because the market appears to be struggling against this wave of supply.
However, CryptoOnchain re-emphasized well-known historical trends, suggesting that this kind of capitulation event, where the market drives out weak hands, has often preceded the formation of a market bottom. If history is anything to go by, the Bitcoin market could possibly be approaching a price level where significant upside trends will occur.
For this to be possible, the analyst added a caveat that this is able to most probably occur under the condition that the 0.5 mark was finally reclaimed, especially if this were to occur on a significant exchange like Binance. At press time, Bitcoin is value about $106,900, with a slight but insignificant increase of 0.3% during the last day.
BTC is trading at $106,948 on the each day chart | Source: BTCUSDT chart on Tradingview.com
Featured image from Flickr, chart from Tradingview
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