Quant says some Bitcoin indices show the same trend as in the fourth quarter of 2020, suggesting that BTCO may take similar action.
Bitcoin netflow and stablecoin supply ratio trends are similar to Q4 2020
As explained by an analyst in a CryptoQuant post, the two BTC indicators: Netflow and Stablecoin supply ratio, both have similar trends to the way they did in the latter part of 2020.
The Bitcoin Netflow Index shows the net number of coins entering or leaving the exchanges. Its value is calculated by taking the difference between flow and flow.
When the metric observes positive values, it means that the exchanges are experiencing more inflows than outflows, and so more investors have started exchanging their BTC for sale purposes.
Similarly, negative values mean just the opposite; Investors are withdrawing from their Bitcoin exchanges to sell in private wallets through Hodal or OTC deals.
Another metric of relevance is the stable coin supply ratio, which divides the market cap of BTC by the market cap of all stable coins.
When the value of the index is at the lower end, it means that there is an abundance of stable coin supply in the market. The high supply could signify a potentially bright outlook in the market as investors use these coins for other crypto collections like BTC.
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On the other hand, higher values of the ratio indicate less supply of stable coins, which indicates a lack of buying pressure in the market. This could lead to a potential bearish trend or the surrounding movement for BTC.
Now, here is a chart showing the trends of these four bitcoin indices:
The similarity between Q4 2020 and the current period | Source: CryptoQuant
As the chart above shows, Netflow has been negative for some time now and the stable coin supply ratio is also holding low.
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This trend was similar to the fourth quarter of 2020.
At the time of writing, the price of Bitcoin is close to $ 43k, down 2% in the last seven days. In the last one month, the crypto price has lost 9%.
Over the past few days, BTC has only shown sideways because Crypto has failed to move above $ 45k. The following chart shows the trend of currency prices in the last five days:
BTC's price continues to consolidate between the $40k and $45k levels | Source: BTCUSD on TradingView
Featured image from Unsplash.com, charts from CryptoQuant.com, TradingView.com