Key Takeaways
What do the addresses where BTC is deposited mean?
The spike to 64,000 active addresses sending BTC to Binance on October 14 marked an increase in sales, but this number is starting to decline.
Is the short-term outlook bullish or bearish?
Based on the available evidence, the outlook remains bearish. There are indications of a bullish reversal, but traders should wait a while before betting on a recovery.
The number of active addresses sending Bitcoin [BTC] to Binance rose dramatically last week as BTC dropped from $121.5k to $102k in a day on Friday, October 10.
Bitcoin inflows decrease as volatility decreases
According to CryptoQuant, between 54,300 and 57,780 unique addresses deposited BTC in the following days.
In fact, in a message at CryptoQuant Insightsanalyst Donkerfost noted that as of October 14, 64,000 unique addresses deposited Bitcoin.
The last time such a large inflow was seen was in July, when BTC crossed the $120,000 mark.
This spike in currency inflows indicated panic-driven selling and short-term capitulation, increasing volatility as BTC fell below $108,000.
However, on October 18, the number of active addresses depositing Bitcoin dropped to 30,850. This gradual decline showed reduced selling pressure and suggested the market may be finding a new equilibrium.
Deciphering BTC’s Short-Term Expectations
Traders and investors should be cautious about betting on a bullish rebound of BTC. They need to be extra careful not to gamble on such a move early.
Because the Liquidation Heatmap for the past two weeks showed that price compression over the past 36 hours caused liquidation levels to rise to $108,000 and $106,200.
Additionally, the higher $114K and $116.5K zones were filled with leveraged positions, making them potential magnet levels for price recovery if BTC breaks above $108K.
Therefore, traders would want to see a move past $108,000 as this would increase the likelihood of further price moves higher into the overhead of the liquidity clusters.
A recent AMBCrypto report highlighted why a rally to $117,000 was possible.
Recently, there has been a sharp increase in China’s M2 money supply. It has a positive correlation with Bitcoin price movements, and the leading cryptocurrency could once again be a beneficiary.
The Discover ETF flows were negative to close the previous week, demonstrating bearish sentiment. ETF capital flow could signal a potential change in public sentiment if it turns positive.