- The Coinbase premium gap metric accurately projected a different Bitcoin demand zone
- Bitcoin exchange flows and whale activity confirmed that liquidity is once again in the bulls’ favor
Bitcoin could be on the verge of another near-term rally despite its recent struggles to maintain bullish momentum. The first half of October is almost over and although expectations for Uptober were high, a contradictory outcome emerged.
The fact that Bitcoin extended its downtrend this week and even fell below $60,000 may have further crushed any bullish expectations for October. However, a recent CryptoQuant analysis suggests that a strong near-term bullish outcome is still possible and may already have begun.
CryptoQuant’s analysis suggested that Bitcoin is currently in an accumulation phase. This claim was based on the Coinbase Premium Gap metric. According to the analysis, every time the BTC Coinbase premium dropped below -50, an increase in accumulation occurred.
Bitcoin Coinbase’s premium gap recently dropped well below -100, but does that mean there was a lot of accumulation too?
Demand for Bitcoin is outpacing selling pressure
Bitcoin’s price action so far this week is consistent with the analysis.
The cryptocurrency was trading at $63,667 at the time of writing, having rebounded more than 6% from Thursday’s weekly low. The sharp recovery confirmed strong demand in and below the $60,000 price range.
Source: TradingView
Here it is also worth noting that the strong bullish momentum made a comeback after the price retested the Fibonacci range of 0.5 and 0.618. This was based on the lowest and highest price levels in September.
This suggests that there is a high probability that accumulation/demand will make a comeback after retesting this zone.
The gap between currency inflows and outflows widened after the dip below $60,000. Outflows from Bitcoin exchanges were significantly higher at 3156 BTC in the last 24 hours, compared to 1972 BTC in the same period. This seemed to confirm that there was more buying pressure than selling pressure.
Source: Cryptoquant
Data on the chain also confirmed notable whale activity this week.
We observed an increase in flows from large holders throughout the week, peaking at 8,590 BTC on October 10. This was significantly higher than the outflows from large holders, which peaked at 7,960 BTC during the same period.
Source: IntoTheBlock
The large holder flows have cooled down somewhat since then. However, inflows were still higher than outflows, indicating a net gain in terms of whale liquidity.
Together, these findings suggested that Bitcoin may be gearing up for another leap forward. However, it remains unclear whether the current momentum will continue in the short term. For now, the recent rebound confirmed that prices below $60,000 can still be considered a good discount.