The price of Bitcoin continues to decline, moving further away from its all-time high of $109,000 set in March. Currently trading under $82,000, the cryptocurrency has faced a substantial drop of 24.6%.
In the midst of this bearish market, CryptoQuant contributor EgyHash has pointed out a concerning trend on Binance that might add more downward pressure on Bitcoin’s price.
Growing Bearish Sentiment
EgyHash observes that Binance, one of the largest cryptocurrency exchanges globally, is witnessing an uptick in crucial metrics that signal increased selling activity. The 7-day moving average of average coin inflows into Binance is on the rise, indicating that investors are depositing larger amounts more frequently.
This increase in inflows typically foreshadows heightened selling activity, as it suggests a greater availability of coins on the exchange’s order books.
Moreover, the “Bitcoin: Exchange Inflow (Top10)” metric, which measures the total coin volume of the ten largest inflow transactions, has reached heights not observed in nearly a year. This surge indicates that large quantities of Bitcoin are being transferred to Binance, likely with the intention of selling.
EgyHash also highlights that the Bitcoin reserves on Binance are rising, returning to levels last noticed in November of the previous year. An increase in exchange reserves usually indicates that more coins are being held by the platform, potentially signaling intensified selling pressure.
Are There Bearish Signals on Binance? Key Metrics Indicate Rising Sell Pressure
“Binance’s Bitcoin reserve has returned to levels last seen in November of the previous year, possibly indicating increased selling pressure.” – By @EgyHashX
Read more at https://t.co/vl4sDIxaKD pic.twitter.com/y7qB1D4IS1
Further reinforcing this viewpoint is the Taker Buy/Sell Ratio, which shows that sell orders currently surpass buy orders, creating a bearish outlook for the market.
These combined factors—rising inflows, increasing exchange reserves, and a prevailing bearish sentiment—may suggest that Bitcoin’s downward trend could persist.
Analyzing the Role of Unrealized Profit and Loss (NUPL)
While the selling pressure on exchanges is a crucial factor, other indicators provide a broader view of the market’s sentiment.
Another CryptoQuant analyst, tugbachain, recently analyzed the Net Unrealized Profit/Loss (NUPL) metric, which assesses the network’s unrealized profits and losses to gauge whether investors are, on average, holding Bitcoin at a profit or a loss.
Currently, the NUPL is just below the 0.50 support level. Historically, a reading under this level has been associated with bearish phases, while a recovery above it could indicate renewed buying interest.
If Bitcoin manages to close February above the 0.50 mark, it might signal a shift towards more positive market behavior, potentially encouraging long-term holders to re-enter the market.
Featured image created with DALL-E, Chart from TradingView
