It has been 4 days since bitcoin came close to taking out the $16,000 level. While it seems like the price is done and it won’t push any further, it isn’t and a metric that considers the mean exchange inflow has lit up the “buy” signal.
Crypto Quant’s CEO Ki Young Ju tweeted,
“The $BTC buy-the-dip indicator says we’re still in a strong buy zone… After the price plunge, there have been subsequent exchange inflows by whales…”
This does seem too good to be true, so let’s take a close look at this “buy-signal”.
As the author of the tweet explains, there are two reasons why exchange inflows would spike
- In the bull market, if there is an inflow spike it would be to sell bitcoin holdings at the local high. These sell orders will be when the retail investors are active on exchanges.
- In the bear market, the inflows would suggest that whales would want to secure their holds in anticipation of a sell-off.
Out of the above two, I think the first is happening, however, we can see that the retail buyers aren’t done buying bitcoins. The proof for this can be split into two
- Square’s selling bitcoin to customers faster than bitcoins are being minted. More specifically, Square is selling double the bitcoins minted. The same trend can be observed with PayPal.
- The CME CoT report shows that Retail demand was at an ATH and is long bitcoin.
This surge in retail demand seen on CME is happening when CME’s OI is taking a jab at the previous ATH of $939 million. This shows that there is an actual volume backing the retail demand. In a previous article, we’ve already talked about how the recent rally was due to retail and high net worth individuals.
So, is this a good time to buy?
Yes, this is a good time to buy, if it is a long term investment. However, if you are doing it for the short term, perhaps, wait for a small pullback up to $13,500.
Bitcoin’s price has hit a point that feels like the start of a bull run or perhaps the pre-bull run. Companies are prospering, bitcoin fundamentals are strong, miners are happy, so, the network and the ecosystem as a whole are performing well. Hence, buying now for a long term hodl would be a good decision.