Traders on Binance, the world’s largest cryptocurrency exchange, are becoming increasingly pessimistic, with data from the platform showing that sell orders and user deposits have been steadily rising.
According to CryptoQuant analyst COINDREAM, it means that short-term confidence has fallen following last week’s historic market crash.
Market Metrics Signal Waning Confidence
COINDREAM’s analysis revealed that three key indicators on Binance are flashing warning signs. First, the exchange’s funding rates for perpetual futures contracts have been negative for three days in a row, which hasn’t been a normal occurrence this year.
“When the exchange with the largest derivatives trading volume shows bearish sentiment, it can have a negative impact on the overall market,” noted the expert.
Secondly, he mentioned that the average number of deposits to the exchange is going up, according to a 7-day moving average. This increase in deposit volume is happening even as prices go down, leading the analyst to conclude that more downward pressure could emerge if the movement fails to find support from strong demand.
The third and maybe most telling metric is the percentage of market sell orders, which is quite high. Usually, the sell volume goes down near price bottoms and shoots above 0.52 around market tops. Given that the Binance market sell ratio is over the 0.52 mark even after last week’s big price drops, the observer said it could mean that selling sentiment among traders on the platform is becoming stronger.
Recovery Stalls Amid Uncertainty in the Economy
The current cautious stance should come as no surprise, given the crypto market just experienced its worst liquidation event in history on October 10. The downturn took more than $19 billion from the market, affecting more than 1.6 million traders.
Even though platforms like Binance have since compensated affected users and markets have made up some of their losses, many observers viewed the event as a big reset. One of them, Doctor Profit, said that the extreme leverage that had been built in the system has now been taken away, putting both bulls and bears on a more equal footing. However, the shift in Binance’s trader behavior suggests that many remain cautious about re-entering the market too soon.
Bitcoin and most major altcoins have bounced back a little, but they are still far below where they were before the crash. Crypto commentators now say the next directional cue will be based on broader economic indicators, like how U.S. stocks will perform in the near future. Some even think that Bitcoin could reach new highs if key support levels hold, but COINDREAM’s analysis suggests that the easiest path for the asset in the short term may be lower.