Judging by the number of exchange withdrawals for some top currencies, there may be ample volatility ahead. USDT, MKR, and ETH all note one-month lows for withdrawals from trading platforms. It appears things may get rather exciting in the days and weeks to come.
Exchange Withdrawals Become Less Popular?
It is always surprising to note the exchange flow of the major trading platforms. An increase in deposits often signifies future volatility, yet the same applies to a decrease in exchange withdrawals. In this particular case, the withdrawals decrease rapidly for the most popular currencies and assets. Why that is the case remains a mystery, yet it creates an intriguing scenario.
For Ethereum, the one-month low in exchange withdrawals is not entirely surprising. Similar to Bitcoin, ETH has not performed well since hitting a new all-time high in recent weeks. Turning the ship around will prove challenging, as the market remains semi-bearish for the most part.
Looking beyond Ethereum, it appears that USDT has a very similar problem. It, too, notes a month-low for exchange withdrawals. Many traders will not mind that aspect, as they consider more USDT on exchanges to be a good thing for upward price momentum. As we documented earlier, there is no evident correlation between USDT and the Bitcoin price. Tempering one’s expectations is required.
With both of these major currencies recording new lows for exchange withdrawals, an intriguing situation ensues. More often than not, it is detrimental to have more liquidity on exchanges than necessary. More liquidity often yields more market pressure, which is the last thing the crypto markets need today.
Even MKR Withdrawals Go Down
Perhaps the most surprising development is how MKR exchange withdrawals are also on the decline. As one of the more prominent DeFi assets, it seems as if more users are intent on keeping funds on exchanges. Whether that signals an intent to sell soon remains challenging to determine.
Judging by the current market momentum, it seems plausible to assume there will be more volatility over the weekend. Bitcoin and Ethereum remain on feeble legs, which will create choppy waters for all other crypto assets. Some altcoins attempt to break out already, but it remains unclear if there is any long-term upward potential. With the exchange withdrawals decreasing, any trend may be limited somewhat.
Additionally, it is equally important not to overstate the importance of exchange withdrawals as a metric. While it can indicate market sentiment to a certain degree, there is always more to the current situation than meets the eye. Cryptocurrency is a fascinating yet unpredictable industry.