Bitcoin data suggests that OTC transfers have been more active recently
On-chain data suggests that Bitcoin OTC transactions have been active recently, while exchange transfers have decreased.
Bitcoin Fund Flow Ratio goes down, while tokens transferred goes up
As pointed out by an analyst in a CryptoQuant post, there are signs that over-the-counter (OTC) deals may increase in the BTC market.
The first indicator relevant here is the “fund flow ratio”, which is defined as the total amount of Bitcoin flowing into or out of exchanges, divided by the total BTC transaction on the entire network.
When the value of this metric is low, it means that a smaller portion of the total network transactions are taking place on exchanges right now.
On the other hand, the value of the ratio is high means that investors are actively using exchanges at the moment.
Another indicator is “tokens transferred”, which is simply the total number of Bitcoin tokens that were involved in on-chain transactions on a given day.
Now, here is a chart showing the trend of these two BTC metrics over the past few years:
Looks like the number of coins being moved on the chain has been going up | Source: CryptoQuant
As you can see in the graph above, the Bitcoin fund flow ratio (30-day moving average) has been on a downward trend for quite some time now.
This means that investors have not been as active in moving coins in and out of centralized exchanges recently.
But at the same time, the total number of transferred tokens has observed a lift. This suggests that instead of the exchange volumes simply falling, the decline in the fund flow ratio is also due to the total coin transfers in the chain increasing.
This may mean that a large part of the total network transactions come from OTC agreements that take place outside exchanges.
Therefore, activity on exchanges may now become less relevant to the price of the crypto compared to the transfers that occur outside them.
BTC price
At the time of writing, Bitcoin’s price is hovering around $21.1k, up 4% in the last seven days. Over the past month, the crypto has lost 11% in value.
The chart below shows the trend in the price of the coin over the last five days.
The value of the crypto seems to have surged up over the last day | Source: BTCUSD on TradingView
After plunging a few days ago, Bitcoin has shown some sharp recovery over the past 24 hours as the crypto has broken above $21k.
Featured image from Jeremy Bezanger on Unsplash.com, charts from TradingView.com, CryptoQuant.com
