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These 3 Things Might Happen to Crypto Market According to CryptoQuant CEO

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Thu, 08/26/2021 - 13:11
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Arman Shirinyan
CryptoQuant CEO reacts to increased exchange inflows
These 3 Things Might Happen to Crypto Market According to CryptoQuant CEO
Cover image via stock.adobe.com

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In a recent tweet, CryptoQuant CEO Ki Young Ju expressed his thoughts on elevated netflow to cryptocurrency exchanges. According to Young Ju, the market may face three different scenarios that will lead to different consequences for both the Bitcoin and altcoins markets.

Increased selling pressure

The first scenario that will follow increased exchange inflow will lead to increased selling pressure on the market. Since traders and investors are moving their funds to exchanges, the main reason should be to make a profit or de-risk their portfolio. Increased selling pressure may lead to a price drop. Previously, various analysts and indicators signaled that the current bull trend lacks funding from the derivatives market.

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The selling pressure, in addition to the lack of buying power, will lead to significantly increased volatility that may not favor bulls.

Overall increased volatility on BTC

Large funds inflows to exchanges does not necessarily mean that all of it will immediately be sold. Bitcoin is often used as collateral, according to the CryptoQuant CEO, and increased net flow might indicate increasing derivatives funding that the current bullrun lacked.

Bitcoin Daily Chart
Source: TradingView.com

Both futures and options contracts are lacking volumes that we witnessed back in April. Large-scale funding of derivatives gives us signs about the nature of the current market. A highly leveraged market leads to increased volatility since private traders are able to make deals with large funds that they do not own.

Alt season

The most positive outcome from the increased exchange netflow is the sellout of Bitcoin in favor of altcoins. While making profits means that investors will sell their Bitcoins in favor of stable coins, the alt season means that holders are moving their funds in order to buy various altcoins like Cardano, which look much favorable in terms of the recent price action.

At press time, Bitcoin is facing a 3.8% daily loss with aggregated 8.3% loss from the local top of $50,500.

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About the author

Arman Shirinyan is a trader, crypto enthusiast and SMM expert with more than four years of experience.

Arman strongly believes that cryptocurrencies and the blockchain will be of constant use in the future. Currently, he focuses on news, articles with deep analysis of crypto projects and technical analysis of cryptocurrency trading pairs.