Bitcoin Taker Buy/Sell Volume Shows “Buy” Signal As BTC Gears Up For Rally
On-chain data shows that Bitcoin buyer’s buy/sell volume is now showing a “buy” signal as crypto appears to be gearing up for another rally.
Bitcoin Taker Buy/Sell Volume Says Now Might Be the Time to Buy
As noted by an analyst in a CryptoQuant afterBTC buyer’s purchase volume recently reached a value that has historically been a green signal for the cryptocurrency.
The “buyer buy volume” is an indicator that measures Bitcoin’s long volume on derivatives exchanges. The metric works by checking orders in the book to see how many buyers are buyers. This volume divided by the total volume is called the taker buy ratio.
When the value of this indicator rises above 0.50, it means that the majority of order takers are currently buyers on exchanges.
On the other hand, the value of the ratio below this threshold implies that Bitcoin short volume is higher at the moment.
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An alternative indicator is ‘buyer sales volume’, which measures the total number of sales orders or short volume.
Here is a chart showing the trend in these Bitcoin indicators over the past few months:
It seems that the taker-buy ratio has been increasing in recent days | Source: CryptoQuant
As you can see in the chart above, the Bitcoin buyer-to-purchase ratio has crossed 0.52 this week. Of course, the sales ratio, on the other hand, has fallen.
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In the post, the quant explains that historically this value of the metric has provided a buy signal for the cryptocurrency. Most recently, the indicator crossed this threshold on Feb. 4, after which the price of the coin started to rise.
If this pattern is also true this time around, it would mean that now is a good time to pile up Bitcoin.
At the time of writing, Bitcoin’s price is hovering around $45k, up 15% over the past seven days. Over the past month, the crypto has gained 14% in value.
The chart below shows the trend in the price of the coin over the past five days.
The price of BTC seems to have risen in recent days | Source: BTCUSD on TradingView
After Bitcoin crashed all the way down to $34k last week, Bitcoin now appears to have made a solid recovery as the coin approaches another retest of the $45k price level.
It is currently unclear whether this recovery will last, as uncertainty posed by the Russian invasion of Ukraine still lingers in financial markets.
Featured image from Unsplash.com, Charts from TradingView.com, CryptoQuant.com