According to CryptoQuant CEO Ki Yong-joo, OTC transactions in bitcoin (BTC) can take place in the same way as in February 2019. According to a network analyst, this is historically an optimistic sign. but Ki Yong-joo warned: Make sure the model is not “absolute” and can not be trusted in isolation.

Key also noted that the number of bitcoin transfers has reached a new annual high, and that these transactions did not come from stock exchanges. Based on two series calculations, he made it clear that this could be a resurgence in OTC volumes. He said:

“The number of converted BTCs is at the highest level in a year, and these transfers have not been made from exchanges. The share of cash flows to all exchanges is at the lowest level in one year. Something is happening. Possibly over-the-counter transactions. This also happened in February 2019. as the volume of OTC transactions increased. “I think this is a strong bullish signal.”

Individual buyers and wealthy miners often buy or sell on the OTC market. This allows BTC to change hands without putting unnecessary pressure on the foreign exchange market.

Data problem
Glassnode CTO Rafael Schultz Kraft said that the increase in volume does not mean a change in BTC. Instead, the analyst said the volume is fixed and represents “BTC change”. He wrote:

“The volume of bitcoins in the chain does not increase and does not reach any heights. Even by making adjustments to fundamental changes, he shows that the volume increase is only a “clear change” for the sender. This is not trading BTC in USD and not a real economic result … I just wanted to point out that this is not the case, the volume is actually resolved – these are just big changes in BTC. ”

Instead of OTC transactions, there may be internal transfers or other types of internal portfolio transactions. In this case, there will not necessarily be a bullish trend for Bitcoin in the near future.

In response, Key explained that the trends are still similar to OTC trades. He pointed to a sudden increase in transaction volumes in February 2019. After a peak in volume, Bitcoin finally returned well from the $ 4000 zone. Key added:

“The only interest is non-exchange / non-metallic organizations that move their money by triggering multiple transactions. OTC transactions are just one option.”

What does this mean for bitcoin?
If the Bitcoin volume boom is associated with OTC trading, this is an optimistic trend that signals the probable beginning of the accumulation phase.

Since miners tend to sell BTC on the OTC market, miners sell BTC in many OTC trades, and whales buy the mined BTC. This cycle reduces the amount of BTC that can be traded on exchanges, and also reduces the selling pressure.

But if the increased transaction activity is not related to OTC trading, this is probably not an event for Bitcoin.

Source: CoinTelegraph