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The coalition includes Google sibling company SandboxAQ and the University of Waterloo.
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On-chain data shows that Bitcoin long-term holders are making deposits to exchanges currently, something that could be bearish for the price. Bitcoin Exchange Inflow CDD Has Spiked Recently As explained by an analyst in a CryptoQuant Quicktake post, investors have been making deposits to spot exchanges recently. There are two relevant indicators here: the “exchange inflow” and the “exchange reserve.” The former of these keeps track of the total amount of Bitcoin that the holders are transferring to centralized exchanges, while the latter one measures the total amount sitting in the wallets of these platforms. When the value of the inflow metric spikes, it means that the investors are moving a large number of coins to the exchanges. As one of the main reasons why holders may make such transfers is for selling-related purposes, this kind of trend can be a sign that selling is occurring. Since selling activity occurs on the spot exchanges, the quant has restricted the exchange inflow and reserve indicators to track only the data related to the spot platforms. The analyst has also chosen another modifier on the exchange inflow: the “Coin Days Destroyed” (CDD). In simple terms, what the CDD checks for is the activity of dormant coins in the market. Tokens that have been sitting in wallets for a long time accumulate a large number of “coin days” (where 1 coin day corresponds to 1 BTC staying still for 1 day) and when these coins finally move, the coin days are reset or “destroyed,” which is the number that the CDD measures. The exchange inflow CDD naturally only keeps track of the coin days being destroyed through transfers to exchanges. Now, here are the charts that show the trends in the 7-day simple moving average (SMA) value of this Bitcoin indicator and the 14-day SMA exchange reserve: From the first graph, it’s visible that the Bitcoin exchange inflow CDD has registered a sharp spike recently. This would suggest that a potentially large number of dormant coins have been moved into these platforms. Usually, the CDD having large values like these can be a sign that the “long-term holders” (LTHs) are on the move. The LTHs (defined as holders carrying their coins since at least six months ago) are the most resolute bunch in the market, so their depositing to exchanges can be something to watch for, as it implies that the market has made even these diamond hands waver. As is visible from the second chart, the exchange reserve has also gone up alongside this spike in the exchange inflow CDD, suggesting that there haven’t been enough withdrawals to make up for these inflows. It now remains to be seen what effect these possible selling moves from the LTHs may have on the Bitcoin price in the coming days. BTC Price Bitcoin has continued its stagnant price action recently as its price is still trading around the $26,400 mark.
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Bitcoin, often known as digital gold, has acquired popularity as a speculative asset as well as a potential store of wealth and hedge against economic downturns. As speculation about an approaching recession grows, concerns about Bitcoin's resiliency and ability to withstand economic storms emerge. Lets examine the dynamics of Bitcoin in the face of a possible recession and seek advice from industry professionals.Bitcoin's So Far JourneyBitcoin, which was created over a decade ago by the pseudonymous Satoshi Nakamoto, was regarded with suspicion and uncertainty at first. It has, however, defied expectations by obtaining widespread acceptability and drawing an increasing number of investors, institutions, and organizations.One of Bitcoin's distinguishing features is its decentralized nature. It runs on a blockchain network managed by a distributed network of nodes rather than a central authority. This decentralization, paired with a limited number of 21 million coins, has established Bitcoin as a digital alternative to traditional fiat currencies, which are susceptible to inflationary pressures.Bitcoin's Spot Trading Volume Hits Five-Year Low Amid Recession FearsBitcoin's spot exchange trading volumes have plummeted to their lowest levels in nearly five years, reflecting heightened macroeconomic uncertainty that has made investors cautious. A recent report from CryptoQuant, an on-chain analytics platform, highlights the decline in daily BTC volumes on spot exchanges, which have not seen a significant rebound.The report attributes this decline to two primary factors: the U.S. government's crackdown on the cryptocurrency industry and growing fears of an impending recession. These concerns have led investors to adopt a cautious approach, with daily Bitcoin transactions showing no signs of resurgence.Challenges for Short-Term HoldersConversely, the past few months have posed challenges for short-term Bitcoin holders (STHs). While long-term holders continue to accumulate Bitcoin, holding nearly 75% of the entire supply, the supply held by short-term holders hit a multi-year low of 2.56 million BTC last month.Despite the challenging market conditions, Bitcoin's fundamental market indicators remain robust. The hash rate has surged by an impressive 661% in the last two years. Additionally, with the next Bitcoin halving on the horizon, data analysis suggests that investors may need to exercise patience for the next bullish phase.Bitcoin as a Recession Hedging ToolOne of the key justifications for Bitcoin's longevity during a recession is its ability to act as a hedge. Historically, traditional hedges such as gold and government bonds have been sought desired during economic downturns. Bitcoin is frequently compared to gold owing to its rarity and ability to store value.Bitcoin supporters believe that its restricted quantity and position as "digital gold" make it an appealing option for investors seeking refuge from economic turmoil. During times of uncertainty and currency depreciation, some people resort to Bitcoin to retain money and protect their assets from the loss of purchasing power.Considerations and ObstaclesWhile Bitcoin's potential as a hedge is enticing, investors and regulators must examine the following obstacles and considerations:Price Volatility: Bitcoin's price has historically been quite volatile. While volatility might provide opportunities for traders, it can also turn off risk-averse investors.Regulatory Framework: The regulatory framework for cryptocurrencies is continually evolving. Government actions and regulations have the potential to have a significant impact on the bitcoin market.Market Sentiment: Market sentiment, news, and social media trends can all have an impact on Bitcoin's price. This can result in dramatic price changes.Adoption and Liquidity: The usefulness of Bitcoin as a hedge is dependent on its adoption and liquidity. Bitcoin's position as a store of wealth may strengthen as acceptance expands.Diversification: A key risk management method is to diversify one's financial portfolio. Bitcoin should be viewed as a component of a diversified portfolio, not as the single buffer against recession.ConclusionThe topic of whether Bitcoin will survive the next economic downturn is complicated and multidimensional. While Bitcoin has showed promise as an economic hedge, it is not without danger. Bitcoin's performance is influenced by price volatility, regulatory uncertainty, and market sentiment.As the global economic environment evolves, Bitcoin's status as a digital asset and potential store of value will almost certainly be called into question. Investors must perform extensive research, determine their risk tolerance, and select a diversified investing strategy that corresponds with their financial objectives.Finally, whether Bitcoin can weather the storms of a recession is unknown. However, its resiliency and growing acceptability in mainstream finance indicate that it will continue to pique the curiosity and debate of investors, economists, and policymakers in the coming years. This article was written by Pedro Ferreira at www.financemagnates.com.
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