Decline in Bitcoin Deposits to Digital Currency Platforms Reaches 2016 Minimum Levels
In the world of cryptocurrency, analysts are always on the lookout for signs that could indicate potential price movements. One such analyst, Alex Adler Jr. of CryptoQuant, has identified several historical trends and patterns that suggest an upcoming Bitcoin rally.
Adler Jr.'s conclusion is that the current decline in deposits and the inflow-to-reserves ratio could signal a significant price movement for Bitcoin. The daily number of BTC deposits to exchanges in the final weeks of 2024 fell to 30,000, a number three times lower than the 10-year average. This trend of low BTC deposits to exchanges and potential Bitcoin shortage in the spot market has been observed before major Bitcoin rallies.
One potential indicator of a rally is the ratio of total BTC inflows to the overall reserves held by exchanges. Adler Jr. believes that this decrease could signal an upcoming rally for Bitcoin. The ratio of total BTC inflows to the overall reserves held by exchanges is another potential indicator of a Bitcoin rally.
Adler Jr. has stated that the lowest levels of the BTC deposits-to-exchanges metric are usually observed at the end of bear markets. This trend of low BTC deposits to exchanges and potential Bitcoin shortage in the spot market has been observed before major Bitcoin rallies.
In addition to this, Adler Jr. believes that experienced investors are actively buying coins from distressed sellers at around $17,000. This trend of accumulation from experienced investors could further fuel a potential Bitcoin rally.
Moreover, Adler Jr. points out that short-term holder (STH) selling at a loss is decreasing during corrections, implying less panic selling and a healthier market sentiment. The volume of selling during price tests of all-time highs remains significantly below past spikes, signaling stronger accumulation from holders rather than distribution.
Furthermore, long-term holders (LTH)—those holding coins from six months to two years—have increased their combined Bitcoin balance substantially. This increase in holding suggests growing confidence among more patient investors.
The 120-day simple moving average (SMA-120) has pivoted upward after a prolonged decline and reached the "zero axis," a key technical level that historically separates bearish from bullish territory. If this upward movement holds for several days, it would technically confirm a trend reversal, a pattern previously associated with multi-week rallies.
Retail transfer activity has also declined, indicating a reduction in speculative and impulsive trading. This consolidation phase often precedes price rallies as it reflects reduced selling pressure from retail participants.
Option market analysis shows that the "Max Pain" price remains near $118,000, with growing call option volumes above this level, suggesting market expectations for higher prices. Breakouts above $118,000, bolstered by call option activity, could lead Bitcoin toward $121,000–$130,000 and beyond.
Macro factors such as US inflation data corrections and upcoming economic events like the Jackson Hole symposium are not seen as trend reversals but as catalysts for short-term correction and profit-taking, after which the prevailing bullish momentum is expected to resume.
Overall, Adler Jr.'s analysis combines on-chain data highlighting increased accumulation by long-term holders, improved technical indicators signaling trend reversals, reduced retail selling, and options market positioning to suggest that a Bitcoin rally, potentially reaching $121,000 and higher, is likely in the near term.
Investing in Bitcoin could be a promising move based on Alex Adler Jr.'s analysis, as he predicts an upcoming Bitcoin rally due to several historical trends and patterns. These indicators include the current decline in deposits to crypto exchanges, the decrease in the inflow-to-reserves ratio, experienced investors buying coins, less panic selling from holders, and a pivotal technical level (SMA-120) reaching the "zero axis". Additionally, the options market shows expectations for higher prices and reduced retail selling, suggesting a consolidation phase that often precedes price rallies.
