What Are The Similarities Between Summer 2020 Bitcoin Markets And Now?
According to a CryptoQuant article by an analyst, there are some similarities between the present market trend and that of the summer of 2020.
The “exchange supply” is a metric that measures the total quantity of Bitcoin in all exchange wallets. Because investors often move their coins to exchanges for selling, this supply is widely thought to represent the crypto’s selling supply.
The supply in investors’ cold wallets, on the other hand, is most certainly being held for accumulation rather than sale.
The “exchange supply shock ratio” is the ratio between this investor’s wallet supply and the exchange reserve. When the value of this metric rises, it indicates that supply on exchanges is decreasing and investors’ cold wallets are filling up.
A decline, on the other side, indicates a drive to sell from sellers as they deposit Bitcoin into CEX. Now, here’s a graph that illustrates the BTC exchange supply shock ratio’s trend over the last few years:
The Quant analyst has indicated the significant trends of similarities between the Bitcoin markets of summer 2020 and right now in the graph above. During both times, it appears that the price was sliding down or moving sideways, while the exchange supply shock ratio was fast increasing. Despite the current price volatility, investors have shown interest in crypto, as they have been swiftly accumulating recently (similar to back then).
A few months after the summer of 2020, a fresh Bitcoin bull run began as a result of the following “supply shock.” BTC is trading at about $40,000 at the date of publishing, up roughly 4% in the previous 24 hours.
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