On-chain data shows the Bitcoin reserve on Binance has been sharply going up in the last couple of days, something that could be a sign of dumping.
Bitcoin Reserve On The Crypto Exchange Binance Has Observed Sharp Growth In Recent Days
As pointed out by an analyst in a CryptoQuant post, the funding rates have been negative while these inflows have been made.
The “exchange reserve” is an indicator that measures the total amount of Bitcoin currently stored in the wallets of a centralized exchange (which, in this case, is Binance).
When the value of this metric goes up, it means investors are depositing their coins to the exchange right now. As investors could be depositing to such a platform for selling purposes, this kind of trend can have bearish impacts on the price of the crypto.
On the other hand, decreasing value of the reserve suggests coins are exiting the exchange currently. Such a trend, when sustained, can be a sign of accumulation from investors, and could thus be bullish for the BTC value.
Now, here is a chart that shows the trend in the Bitcoin exchange reserve for the crypto exchange Binance during the past month:
The value of the metric seems to have been riding an upwards momentum in recent days | Source: CryptoQuant
As you can see in the above graph, the Binance Bitcoin exchange reserve started to rapidly fall down around ten days ago as the crash started.
This happened because the collapse of FTX made investors more wary of crypto exchanges than ever before, and so they were withdrawing coins off centralized platforms in hordes.
After seeing a final sharp plunge a little less than a week ago, the indicator started moving sideways. In the past couple of days, however, this trend has changed.
The Binance Bitcoin exchange reserves are now climbing back up quickly, suggesting that investors have been depositing large amounts.
This could be a sign of activity from whales, and would imply that these humongous holders may be preparing to dump.
The quant has also talked about another indicator’s trend, the “Funding Rate,” which tells us whether the futures market is leaning towards shorts or longs right now. The below chart displays the trend in this metric.
Looks like the metric has a red value currently | Source: CryptoQuant
The funding rates are highly negative at the moment, implying the majority of the contracts are shorts. Based on this the analyst thinks a short squeeze could possibly take place, which would propel the price in the short term.
However, the quant also believes that’s when the whales would potentially make their move, and dump the crypto.
BTC Price
At the time of writing, Bitcoin’s price floats around $16.5k, down 6% in the last week.
BTC continues to consolidate | Source: BTCUSD on TradingView
Featured image from Rémi Boudousquié on Unsplash.com, charts from TradingView.com, CryptoQuant.com