Bitcoin Exchange Deposits Drop to 4-Year Low, Is the Bottom Here?

• Bitcoin exchange deposits have dropped to a 4-year low, suggesting that the bottom of the market has been reached.
• The “exchange depositing transactions” metric measures the total number of Bitcoin transfers that are sent to centralized exchanges.
• Low values of this indicator suggest that not many investors are applying selling pressure right now.

Bitcoin has been on a wild roller coaster ride this year, starting off with a massive rally that took the world by storm and ending with a prolonged bear market that saw prices fall to levels not seen in over four years. However, recent on-chain data shows that the tide might be turning, with Bitcoin exchange depositing transactions now at a 4-year low, indicating that the bottom may be here.

The “exchange depositing transactions” is an indicator that measures the total number of Bitcoin transfers that are headed towards centralized exchanges. This metric differs from the more popular exchange inflow, which tells us the total amount of BTC being deposited to exchanges, that is, the combined sum of the value of each transaction going to exchanges (rather than their total number). This value can be artificially inflated by a few whales and are thus not representative of the trend being followed by the entire market (especially the retail investors).

However, this indicator is different in that it only focuses on the number of individual transfers taking place rather than their amounts. As a result, it provides a more accurate picture of whether holders are sending coins to exchanges or not. High values of this metric can have bearish implications for the price of the crypto, since one of the main reasons holders deposit to exchanges is for selling purposes. On the other hand, low values suggest that not many investors are applying selling pressure right now.

As pointed out by an analyst in a CryptoQuant post, the current levels of the 30-day moving average Bitcoin exchange depositing transactions are the same as in Q1 2019. This could be seen as a sign that the market is ready to turn around, with the bearish trend coming to an end. Of course, there is no guarantee that this is the case, and further price action will need to be monitored to confirm if this is indeed the case.

In any case, it is clear that the trend of Bitcoin exchange depositing transactions is an important metric to watch, as it provides a valuable insight into the actions of Bitcoin holders. Low values of this indicator could be a sign that the market is about to turn around and enter a new bull run.