On-chain data shows the Bitcoin taker buy/sell volume is now showing a “buy” signal as the crypto looks to be gearing up for a new rally.
Bitcoin Taker Buy/Sell Volume Says Now May Be The Time To Buy
As pointed out by an analyst in a CryptoQuant post, the BTC taker buy volume recently reached a value that has historically been a green signal for the crypto.
The “taker buy volume” is an indicator that measures the long volume of Bitcoin on derivatives exchanges. The metric works by checking orders on the book to see how many takers 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 the majority of the order takers are currently buyers on exchanges.
On the other hand, the value of the ratio below this threshold implies that the Bitcoin short volume is higher at the moment.
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An alternate indicator is the “taker sell volume,” which measures the total number of sell orders or the short volume.
Now, here is a chart that shows the trend in these Bitcoin indicators over the past few months:
Looks like the taker buy ratio has risen in the past couple of days | Source: CryptoQuant
As you can see in the above graph, the Bitcoin taker buy ratio has exceeded the value of 0.52 this week. Naturally, the sell ratio has gone down on the other hand.
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In the post, the quant explains that this value of the metric has historically flashed a buy signal for the cryptocurrency. Most recently, the indicator went above this threshold on 4th Feb, following which the price of the coin observed a surge.
If this pattern holds true this time as well, it would mean that now may be a good time to stack up on Bitcoin.
At the time of writing, Bitcoin’s price floats around $45k, up 15% in the last seven days. Over the past month, the crypto has gained 14% in value.
The below chart shows the trend in the price of the coin over the last five days.
BTC's price looks to have surged up over the past couple of days | Source: BTCUSD on TradingView
After crashing all the way down to $34k last week, Bitcoin seems to have made some solid recovery back now as the coin approaches another retest of the $45k price level.
Currently, it’s unclear whether this recovery will last as the uncertainty due to the Russian invasion of Ukraine still looms over financial markets.
Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com