On-chain data shows the Bitcoin flow from spot exchanges to derivatives exchanges is currently painting a trend that has historically been bullish for the crypto’s price.
As pointed out by an analyst in a CryptoQuant post, the BTC spot to derivatives flow may be hinting at a bullish outcome for the crypto.
The “spot exchanges to derivatives exchanges flow” is an indicator that measures the total amount of Bitcoin moving from spot wallets to derivatives wallets.
When the value of this metric rises, it means a higher number of coins are now being transferred to derivatives exchanges from spot as investors look to open futures positions.
In the past, the indicator’s value has usually moved faster whenever the price of the crypto has observed a large decrease.
Now, here is a chart that shows the trend in the Bitcoin spot exchanges to derivatives exchanges flow over the last few years:
As you can see in the above graph, the quant has marked the relevant portions of trend of the Bitcoin spot to derivatives flow.
It looks like whenever the indicator has observed a sharp increase to high values followed by a plunge, the value of the crypto has started climbing up.
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During 2018, 2020, and 2021, this pattern formed shortly after the coin’s price had a sharp decrease and hit a bottom.
This trend may show that as Bitcoin approaches a bottom, whales start sending large amounts of the crypto to derivatives exchanges for opening long positions, hence creating a large spike on the chart.
Just recently, the spot to derivatives flow’s value sharply rose up, and now it seems to be plunging back downwards.
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This could mean that the metric has once again started to form the same pattern, and if history is anything to go by, this can prove to be bullish for the crypto’s price, at least in the short term.
At the time of writing, Bitcoin’s price floats around $29.5k, up 1% in the last seven days. Over the past month, the crypto has lost 2% in value.
The below chart shows the trend in the price of the coin over the last five days.
Bitcoin seemed to be gaining some footing over the $30k level recently, but today the coin has once again slumped back below the mark.