The ongoing bitcoin correction may get worse in the coming weeks due to a current trend among traders and large investors. Analysts at the crypto research firm CryptoQuant have discovered that BTC traders are sending large amounts of their holdings to exchanges.
Historically, large exchange deposits have preceded major sell-offs, while withdrawals from trading platforms signal that investors are moving their assets to self-custody. In this situation of increasing BTC deposits, traders intend to continue selling the digital asset amid the ongoing downturn.
BTC to See More Selling Pressure
BTC fell to a seven-month low of just over $80,000 last week. Although the asset had recovered to the $91,000 range at the time of writing, bears remain in control, and momentum is weak, according to CQ’s report.
As the cryptocurrency fell towards $87,000, the total number of units sent to exchanges rose to a high of 9,000 BTC on November 21. Market experts found that 45% of the total number of assets sent to trading platforms comes from large deposits – investors depositing 100 BTC or more at a time. The average deposit value spiked from 0.6 BTC last week to 1.23 BTC a few days ago, reaching the highest level in a year.
If traders and Bitcoin investors continue to deposit BTC in large quantities on exchanges, then the cryptocurrency may have a harder time recovering from this drawdown. A new wave of strong demand will be needed to absorb the supply and reignite a rally in the asset’s price.
ETH and Altcoins Not Safe Either
Besides BTC, Ether and other altcoins are also seeing substantial exchange deposits. For ETH, total inflows to trading platforms have not risen much, but the deposits are increasingly dominated by significant amounts. Since the second-largest crypto asset fell to $2,900, the daily average exchange deposit has increased to 41.7 ETH, a level not seen in almost three years.
Meanwhile, the total daily number of deposits across the altcoin sector has remained high. Since July, the number of transactions sending altcoins to exchanges has hovered at over 40,000. The transactions peaked at 78,000 on October 17. This high exchange deposit activity aligns with the low price momentum observed in the altcoin sector in this cycle.