A Bitcoin Indicator Just Hit A 9-Month Low, What Does It Mean For The Price?

[Cz Rock]

The Bitcoin exchange fund flow ratio has just hit a nine-month low. Here is what it might mean for the price of the cryptocurrency.

The Exchange Fund Flow Ratio
The signal of interest here is the all Bitcoin exchanges fund flow ratio. It’s defined as the total amount of BTC flowing in/out of exchanges divided by the total amount of BTC transferred on the network.

All exchanges fund flow ratio = Total Exchange Inflows + Outflows ÷ Total Transferred BTC on whole network

In simple terms, the fund flow ratio shows how many Bitcoins are occupied by exchanges compared to those sent on the whole BTC network.

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When the fund flow ratio number increases, it means the market volatility is up as more transfers are taking place on exchanges.

On the other hand, when this number decreases, it implies people are opting for OTC (or “Over The Counter”) deals instead of using exchanges for transactions.

Traditional OTC deals include P2P transfers and trading desks. There is also a newer method, called decentralized dark pools. In which, traders don’t have to trust each other (or a trading desk organization) as trades are automatic and anonymous thanks to smart contracts.

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