Deposits from large investors are driving currency inflows, pushing up the average deposit amount of BTC and ETH.
The ongoing correction in Bitcoin is likely to get even worse in the coming weeks due to the current trends of traders and large investors. Analysts at cryptocurrency research firm CryptoQuant have discovered that BTC traders are transferring large amounts of their holdings to exchanges.
Historically, large exchange deposits have preceded large-scale sales, while withdrawals from trading platforms indicate investors are moving assets into self-custody. In this situation of increasing BTC deposits, traders intend to continue selling digital assets even in the continuing economic downturn.
BTC faces further selling pressure
BTC fell to a seven-month low of just over $80,000 last week. According to a CQ report, assets have recovered to the $91,000 level at the time of writing, but the bears are still in control and momentum is weak.
The total number of units sent to exchanges rose to a high of 9,000 BTC on November 21st as the cryptocurrency fell towards $87,000. Market experts have found that 45% of the total number of assets sent to trading platforms comes from investors who deposit large amounts, i.e. more than 100 BTC at a time. The average deposit amount jumped from 0.6 BTC last week to 1.23 BTC a few days ago, the highest level in a year.
If traders and Bitcoin investors continue to deposit large amounts of BTC on exchanges, the cryptocurrency could find it even harder to recover from this drawdown. A strong new wave of demand will be needed to absorb supply and reignite asset price growth.
Neither ETH nor altcoins are safe
In addition to BTC, there are also large exchange deposits in Ether and other altcoins. In the case of ETH, the total inflows to the trading platform have not increased significantly, but large deposits are increasingly accounting for it. Since the second-largest crypto asset fell to $2,900, the average daily exchange margin has increased to 41.7 ETH. This is a level not seen in nearly three years.
Meanwhile, the total number of daily deposits across the altcoin sector remains at a high level. Since July, the number of transactions transferring altcoins to exchanges has remained at over 40,000. The number of transactions peaked at 78,000 on October 17th. This strong movement in exchange deposits is consistent with the lower price momentum observed in the altcoin sector this cycle.
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