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Bitcoin accumulation on exchanges may not be a bullish sign, analyst warns



  • Bitcoin accumulation on exchanges surged but analysts warned it may not guarantee a bullish trend.
  • Traders turned optimistic towards BTC as Implied Volatility declined.

In recent times, Bitcoin [BTC] accumulation on exchanges was on the upswing. This phenomenon, although often associated with bullish sentiment, comes with subtleties that traders should heed.


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Proceed with caution

Despite the consistent increase in BTC accumulation on exchanges, seasoned analyst Willy Woo sounded a note of caution. He believed that optimism might be misplaced in this context.

According to Woo’s analysis, the simple act of accumulating BTC on exchanges does not guarantee a surge in its price. He cited historical data from 2022 when BTC inventories on exchanges swelled, but a significant price rally did not ensue.

The crucial factor here is that the futures markets, which contributed synthetic BTC to the inventory, played a balancing role. The market only exhibited a bullish trend when the futures markets changed their stance.

Source: glassnode

Furthermore, Woo emphasized that investors now had an alternative avenue for gaining exposure to BTC which was futures ETFs. However, this avenue doesn’t lead to a supply shock, as these ETFs represented paper bets on price movement.

Hedge funds can easily take the opposite side of these bets, resulting in the creation of new synthetic BTC. The potential supply of synthetic BTC through futures ETFs is virtually limitless according to him

Woo underscores the need for a spot ETF in the market. For seven years, a spot ETF has been denied approval while futures markets have thrived. A spot ETF would provide a more authentic representation of actual BTC holdings.

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How are traders doing?

In addition to Woo’s insights, recent data from Glassnode revealed a noteworthy development. The 24-hour trading volume of Perpetual Futures Contracts on Binance hit a two-year low at $1,455,021,171.92.

This drop in trading activity is a significant shift from the trend observed on January 8, 2023, when the previous two-year low was recorded. This suggested that traders were moving away from betting on BTC at the time of writing.


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Additionally, the BTC put-to-call ratio experienced a decline, dropping from 0.50 to 0.47 according to data from The Block. A shift in the put-to-call ratio suggested that traders were slightly more optimistic about the future of BTC.

Another notable metric is implied volatility (IV). IV measures the expected price fluctuations in the market. The decline in IV may suggest that market participants perceive reduced uncertainty regarding BTC’s price direction in the future.

Source: The Block

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