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The data on the channel shows the Bitcoin Interexchange Flow Pulse is on the verge of seeing a trend reversal, here's what it can mean for the price of crypto.
Bitcoin Interexchange Flow Pulse Is Crossing Over Its 90-Day MA
As per CryptoQuant’s on-chain year-end dashboard release, the trend shifts in this metric have historically occurred with phase changes in the market. The “Interexchange Flow Pulse” is an indicator that measures the 1-year cumulative net flows between COINBASE and derivative exchanges.
When the value of this measure increases, it means that investors are moving more coins from cash exchanges to derivatives exchanges at this time, and are therefore prepared to take more risk. On the other hand, weak securities suggest that little capital is currently circulating in derivatives exchanges.
Now, here is a chart that shows the trend in the Bitcoin Interexchange Flow Pulse, as well as its 90-day moving average (MA), in recent years:
Looks like the value of the metric may be beginning to turn around | Source: CryptoQuantAs you can see from the chart above, a pattern seems to have historically followed with the Bitcoin Interexchange Flow Pulse during the bear-up trends in crypto price. Whenever the coin has observed a bullish period, the indicator has seen a constant climb and has stayed above its 90-day MA.
This is because investors are usually prepared to take more risk in bull markets, and thus to send ever-increasing sums to derivatives exchanges for the establishment of leverage positions.
However, every time the metric changed direction and crossed under the 90-day ma, a summit training was held in the btc price, The uptrend has come to an end. In the bear markets that have followed such periods, the Interexchange Flow Pulse has usually continued to go down and has remained below its 3-month average. Again, the reason it's happening is simple; bear markets happen when the average holder doesn't want to take risks, and therefore the flow of capital to derivatives dries up.
This evolution of the indicator continues to the point of reversal, where the price forms its background and the metric begins to move upwards in the opposite way (traversing over its 90 days ma in the process).
In the current bearish market as well, the Bitcoin Interexchange Flow Pulse has steadily declined while remaining below its 90-day AM. More recently, though, the decline appears to have stopped, and now the indicator is back to its long-term average.
If the historical pattern is anything to go by, a successful crossover and reversal in the Interexchange Flow Pulse’s trajectory here would mean the bear bottom is in for the current cycle, and a slow transition towards a bull market could follow.
As of writing, the price of Bitcoin hovers around $16,600, down 1% in the past week.
The value of the crypto seems to have declined over the last couple of days | Source: BTCUSD on TradingView
