These Two On-Chain Signals Precede Bitcoin Falls, Suggests Analyst
20 September 2022 - 5:00AM
NEWSBTC
An analyst has suggested that two on-chain signals may be used to
predict Bitcoin falls as they seem to have historically preceded
drops in the crypto’s price. Bitcoin Selling Of 7yrs-10yrs Old
Coins Spiked Up Recently As pointed out by an analyst in a
CryptoQuant post, BTC dumping of coins aged between 7 years to 10
years and ETH dominance rising up can be two signs to look for
before falls in the coin’s value. The first indicator of relevance
here is the “Spent Output Age Bands,” which checks for on-chain
movement of coins and tells us which age groups were responsible
for them. The different “coin age groups” in the market include
coins based on the total amount of time they were sitting idle for
before being moved or sold. The group in question here is the “7
years to 10 years old” cohort. The Spent Output chart for this
group, therefore, shows how many coins were moved that were
previously sitting idle for periods in this range. Here is the
graph for it: The value of the metric seems to have spiked up in
recent days | Source: CryptoQuant As you can see in the chart, the
quant has marked the relevant points of trend for this Bitcoin
indicator as well as the corresponding BTC price. The analyst
explains that whenever the spending of the 7 years to 10 years age
band exceeds 5000, BTC usually observes a downtrend in its value.
Related Reading: Bitcoin Monthly Stats: Cost Basis, Long-Term
Holders, And The Cyclical Bottom Out of the 7 times the signal was
seen during the last few years, only once did the price not
register a plunge down. Ethereum Dominance Was Also Elevated In
Recent Weeks The other indicator that the analyst believes to be of
note is the “ETH dominance,” which is a measure of the total crypto
market cap percentage share for Ethereum. The below chart shows the
trend in this metric over the last few years. Looks like the value
of the metric has been high recently | Source: CryptoQuant It seems
the Ethereum dominance exceeding the 20% mark has also been a
bearish sign for Bitcoin during this period. In conclusion, the
analyst suggests that proper use of these two indicators in
conjunction may help investors prepare for downtrends in the
future. Related Reading: Quant Explains How Whales Moved Before And
After Ethereum Merge At the time of writing, Bitcoin’s price floats
around $18.7k, down 16% in the last seven days. Over the last
month, the crypto has lost 18% in value. The below chart shows the
trend in the price of the coin over the last five days. BTC's value
has plunged down over the last day | Source: BTCUSD on TradingView
Featured image from Bastian Riccardi on Unsplash.com, charts from
TradingView.com, CryptoQuant.com
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