FX.co ★ Bitcoin: An alarming (or optimistic) sign from derivatives exchanges

According to CryptoQuant, bitcoins are seen moving from their main addresses to derivatives exchanges. The CEO of the company suggested that the reason for the migration of coins could be filling the margin or opening new positions.

The rapid growth in the exchange inflow of bitcoins from large exchange wallets can be a wake-up call for market participants. Often, such movements from the spot market to the derivatives exchange served as a sell signal. Traders usually hold their funds on exchanges during periods when they are preparing to sell bitcoin.

But now the CEO of CryptoQuant has suggested a different version. He believes that some bitcoin holders may start to open new long positions or fund their previous positions, which were close to liquidation amid the recent fall of the main cryptocurrency. He also added that most of the time these wallets were transferring funds to exchanges, they accumulated large volumes of bitcoins, which led to a sharp increase in prices.

Earlier, the increase in inflows of derivatives was observed in October, just before the start of the last major bullish round last year, in which bitcoin rose from $10,000 to $60,000. The reason for such a strong rise in prices then was positions with a high proportion of leveraged funds. To generate significant increases in market volatility, most positions must be funded by derivatives exchanges that provide high margins for traders.

Does this mean that the market can quickly feel the effect of such a bitcoin migration? Probably not, as the volumes being moved are too large to be executed immediately.

Meanwhile, locally, since yesterday, there was no clarity regarding the direction of bitcoin. The technical picture has hardly changed. Bitcoin closed with a growing candlestick with long shadows, but below the support level of the side channel 46,299.48 - 50,513.53. Friday's daily candle looks almost the same so far.

This means that Thursday's forecast remains valid. If the price does not return to the channel above the level of 46,299.48, it means that the downward correction is likely to continue.

The targets for the fall of BTC/USD will first be the red dotted support at 44,807.24, and if this level is broken, the price will go even lower to the strong mirror level of 41,980.24.