Bitcoin Spot To Derivatives Flow Spikes Up, Bullish Sign For Price?

Bitcoin spot to derivatives exchange flow has surged up recently, something that has preceded local bottoms for the crypto in the past.

Bitcoin All Exchanges To Derivative Exchange Flow Observes Uplift

As pointed out by an analyst in a CryptoQuant post, whales have been moving their coins into derivative exchanges recently.

The relevant indicator here is the “all exchanges to derivative exchanges flow mean,” which measures the amount of Bitcoin being moved from spot exchanges (or other derivative exchanges) to derivative exchanges.

When the value of this metric spikes up, it means whales are moving a large number of coins to derivative exchanges from spot markets right now.

On the other hand, low values of the indicator suggest investors aren’t depositing that much BTC to these exchanges currently.

Now, here is a chart that shows the trend in the Bitcoin all exchanges to derivative exchanges flow mean over the last few years:

The 30-day moving average value of the metric seems to have been quite high in recent days | Source: CryptoQuant

As you can see in the above graph, the quant from the post has marked the relevant points of trend for the Bitcoin all exchanges to derivative exchanges flow mean.

It looks like whenever this indicator has observed a surge, the price of the crypto has seen a local bottom formation. On the contrary, lows in the metric have usually coincided with tops in the value of BTC.

The reason behind this trend is likely because of whales opening up a large amount of long positions around bottoms, while during tops they distribute in the spot market (and hence don’t send as many coins to derivatives).

This pattern was also followed a few months back, when the crypto seemingly hit a bottom under the $18k level.

Most recently, as the crypto’s price has sunk down, the spot to derivatives flow has once again surged up. If past trend follows this time as well, then Bitcoin could observe another local bottom here and follow up with some bullish momentum, at least in the short term.

BTC Price

At the time of writing, Bitcoin’s price floats around $19.1k, down 4% in the past week. Over the last month, the crypto has lost 17% in value.

The below chart shows the trend in the price of the coin over the past five days.

Looks like the value of the crypto has seen a little recovery since the plunge down below the $19k level yesterday | Source: BTCUSD on TradingView

Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com