- Compared to other countries, BTC deposits on U.S. exchanges have been increasing.
- BTC tapped $38,000 showing prospects of hitting $40,000 before 2023 closes.
Changpeng Zhao (CZ) stepping down from the helm of affairs at Binance may not be bad for Bitcoin [BTC] based on the movement of one metric.
When CZ resigned, many market players expected BTC price to have a severe nosedive. Though the coin dropped below $36,000, it recovered within a short period.
Unknown to many, that incident could be instrumental in Bitcoin’s quest for more upside. This inference was because of the U.S. versus offshore Exchange Reserve Ratio.
This on-chain metric tells us the ratio between the number of Bitcoins sitting on U.S. exchanges and foreign ones.
Not every departure is bad
When the U.S. versus offshore Exchange Reserve Ratio increases, it means that the number of Bitcoin deposits on exchanges is going up compared to the other party. If the metric decreases, it implies otherwise.
As of 21st November, the metric was -0.46. But at press time, it had increased to -0.44, according to AMBCrypto’s analysis of CryptoQuant data.
Source: CryptoQuant
In past cycles, the Bitcoin supply on U.S. exchanges rises before a bull run. When the bull run begins, the supply on these exchanges drops. So, it is likely that we are seeing history repeat itself.
Crypto sunmoon, a Korean on-chain analyst and author on Crypto Quant also backed this up saying:
“If the recent regulations on CZ and Binance lead to an increase in the percentage of bitcoin held on US exchanges, we will be ready for the next bull market.”
Before the jump in metric, there has been speculation that the U.S. government was bent on reducing the Binance dominance in the country. So, it may not be surprising that the deposits on exchanges based in the country increased.
Eyes on $40,000
Furthermore, BTC was already showing signs that it could be ready for a rally as its price crossed $38,000 on 24th November. The increasing market share of U.S. exchanges was also confirmed as true by the Korean Premium Index.
The Korean Premium Index shows the gap between Korean exchanges and other exchanges. At press time, the metric decreased, including fewer deposits by retail investors.
Source: CryptoQuant
If the index had increased, it would have implied that there was strong buying pressure from the Asian end. However, that was not the case. For the time being, the BTC Open Interest has been increasing.
Open Interest shows the amount linked to the open futures contracts in the market.
When the Open Interest is low, it means traders are closing their positions. But when it increases like it was at the time of writing, it suggests a rise in open contracts.
Source: Coinglass
Read Bitcoin’s [BTC] Price Prediction 2023-2024
Concerning the price action, the rising Open Interest alongside the increasing value implies that BTC has the potential for another rally.
In fact, some traders are targeting a $40,000 milestone for the coin before the year ends.
