The cryptocurrency market appears to be gearing up for its next upward trend as several key indicators, including Bitcoin‘s BTC/USD Exchange Flow Multiple, show signs of accumulation.
What Happened: The Exchange Flow Multiple (30-day/365-day) – an indicator measuring the ratio between short-term and long-term inflows and outflows of Bitcoin on exchanges – has reached its lowest point this year, suggesting decreased volatility in Bitcoin exchange flows, according to CryptoQuant.
A decline in this indicator points to a significant drop in short-term inflows and outflows, which is often a reflection of investors accumulating assets in anticipation of future price increases.
Historically, such patterns align with the early stages of a bull market.
In recent data, this low Exchange Flow Multiple mirrors the values observed before the market rally in early 2023, hinting that the market might be preparing for another surge.
Two factors are contributing to the current downward trend in the Exchange Flow Multiple. First, long-term investors, or “HODLers,” continue to hold their assets, reducing trading volumes on exchanges.
This behavior is typical of experienced participants in the early stages of a bull market who prefer not to exit their positions, expecting further price increases.
Second, following market corrections, reduced activity indicates that active investors are waiting for price stabilization before resuming trading.
Adding to this bullish outlook, fund inflows into Bitcoin-related products are on the rise.
During the week of Sep. 23 to Sep. 27, Bitcoin spot ETFs recorded net inflows of $1.11 billion, according to data from SoSo Value.
The largest contributions came from BlackRock‘s ETF IBIT, with inflows of $499 million, and Ark & 21Shares’ Bitcoin ETF ARKB, which saw $269 million in inflows.
Ethereum ETH/USD spot ETFs also experienced positive movement, with a net inflow of $84.51 million, suggesting growing investor confidence in the broader cryptocurrency market, data shows.
Why It Matters: Market analysts, like Ruslan Lienkha, Chief of Markets at YouHodler, are expressing a cautiously optimistic sentiment.
“From a technical analysis perspective, the weekly chart remains optimistic, showing a bullish flag pattern,” Lienkha told Benzinga, noting the possibility of continued upward trends fueled by fundamental factors like the recent interest rate cuts.
However, he also cautioned about looming macroeconomic risks, particularly concerns around a potential U.S. recession.
“The market has at least three months to benefit from reduced borrowing costs before any potential negative news about a recession surfaces,” Lienkha added.
The upcoming U.S. presidential election could further influence market dynamics.
According to Lienkha, a win for former President Donald Trump might ignite short-term optimism in the crypto market due to his generally perceived crypto-friendly stance, potentially driving token prices higher.
Conversely, a continuation of the Democratic administration could result in a more conservative regulatory approach, with minimal changes anticipated in the industry.
Despite potential short-term risks, long-term growth prospects remain strong.
Bitcoin’s current accumulation phase, coupled with the growing inflow of funds into digital assets, paints a picture of a market gearing up for sustained growth.
“The current prices for BTC, ETH, Ripple XRP/USD and Solana SOL/USD present a reasonable opportunity to start accumulating long positions,” Lienkha commented, suggesting that any market downturns should be seen as buying opportunities, underscoring the resilience of the crypto market.
What’s Next: This evolving market landscape and its impact on future trends will be key discussion points at Benzinga’s Future of Digital Assets event on Nov. 19.
Read Next:
Image: Shutterstock
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
