Crypto Market Volatility Looms as Bitcoin Sell-Side Risk Ratio Hits All-Time Low

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On Tuesday, May 23, the world’s largest cryptocurrency Bitcoin (BTC) experienced some selling pressure, currently trading 2.32% down at a price of $26,748 with a market cap of $518. In recent weeks, trading volumes for Bitcoin and other cryptocurrencies have reached historic lows, causing confusion among investors regarding its future direction.

On-chain data presents a somewhat optimistic outlook on the charts. Checkmate, the lead on-chain analyst at Glassnode, recently reported that Bitcoin’s sell-side risk ratio has hit an all-time low. This indicates that investors are reluctant to spend their Bitcoins, whether in profit or loss, within the current price range. This is usually observed when sellers on both sides become exhausted, suggesting that significant moves could be imminent.

Additionally, on-chain data from Glassnode indicates that as trading volumes and liquidity decline across the crypto market, volatility may be on the horizon. “With price ranges compressed, and on-chain transfers at cycle lows, $BTC is unlikely to sit still for very long,” Glassnode states.

Glassnode also notes that major Bitcoin inflows to exchanges are at their cyclical lows of $1.65 billion – the lowest value since the beginning of the primary bull market. This significant compression in exchange inflows implies that “structural market liquidity remains extremely low.” This could be linked to the recent decisions of major market makers like Jane Street and Jump Crypto to exit the US market due to the lack of clear regulations. “With an increasingly illiquid market, with very thin order books, the likelihood of market volatility largely increases,” Glassnode emphasizes.

After its impressive rally earlier this year, Bitcoin has struggled to break past the $30,000 level. It has remained under constant selling pressure since then. With the cryptocurrency now at $26,748, it is uncertain whether it can hold the $27,000 mark or if it will continue to slip in value.

However, it is important to highlight that the information presented here may include the personal opinion of the author and is subject to market conditions. Always conduct your market research before investing in cryptocurrencies, as neither the author nor the publication holds any responsibility for personal financial losses.

Source: Coingape

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