- A noteworthy on-chain metric, Bitcoin’s yearly absorption rate on exchanges, suggests a positive future for BTC’s price.
- The current yearly Bitcoin absorption rate for exchanges is at a negative 100%, which is viewed as a bullish indicator.
One acclaimed crypto analyst is placing Bitcoin (BTC) under the microscope, focusing on an often-overlooked on-chain metric. The resulting insights suggest a promising future trajectory for BTC’s price action.
In a recent YouTube broadcast, the pseudonymous host of InvestAnswers delves into Bitcoin’s yearly absorption rate on crypto exchanges.
Interpreting On-Chain Signals
InvestAnswers bases its analysis on data from Glassnode, a leading crypto analytics firm. Glassnode defines absorption as the relationship between the annual change in exchange balance and the quantity of BTC mined over the same period.
The firm elucidates,
“This metric presents a relative measure of the quantity of new issuance theoretically absorbed by this group. It should be noted that values over 100% are possible as coins can be transferred from other investor cohorts.”
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Speaking to his 446,000-strong YouTube audience, the InvestAnswers host suggests that the existing absorption pattern points to “much higher prices in the future” for Bitcoin.
In his analysis, a negative absorption rate, such as the current scenario, indicates a net withdrawal of Bitcoin from exchanges. This suggests that more BTC is being withdrawn than deposited, which is typically considered a bullish signal. Such a pattern suggests reduced selling pressure, implying investors are retaining their Bitcoin rather than offloading it on exchanges.
The current annual Bitcoin absorption rate for exchanges is noteworthy, resting at a negative 100%. The host of InvestAnswers emphasizes the importance of this trend, highlighting it as a critical factor in Bitcoin’s potential price surge.
At the time of writing, Bitcoin is trading at $30,040. The premier cryptocurrency, gauged by market capitalization, has seen a 0.86% increase over the past 24 hours. This positive price activity aligns with the bullish prediction suggested by the absorption rate analysis, further solidifying the notion of Bitcoin’s potential upward momentum.
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