The Bitcoin taker buy/sell ratio is currently forming a crossover that has led to the price of the asset observing a decline in the past.
Bitcoin Taker Buy Sell Ratio Moving Averages Are Crossing Over
As pointed out by an analyst in a CryptoQuant post, the 350-day moving average (MA) of the metric is crossing with the 100-day exponential moving average (EMA) right now. The “taker buy/sell ratio” is an indicator that measures the ratio between the taker buy and taker sell volumes in the Bitcoin futures market.
When the value of this metric is greater than 1, it means the long or the taker buy volume is higher than the short or the taker sell volume currently. Such a trend suggests that more users are willing to pay a higher price for BTC right now.
On the other hand, values below the threshold imply the taker sell volumes are more dominant in the futures market at the moment, and thus, a bearish sentiment is shared by the majority.
Now, here is a chart that shows the trend in the 350-day MA and 100-day EMA versions of the Bitcoin taker buy/sell ratio over the last few years:
Looks like the two metrics have come together in recent days | Source: CryptoQuant
As you can see in the above graph, the quant has highlighted how the behavior of these two moving averages of the taker buy/sell ratio seems to have affected the price of the cryptocurrency.
It looks like whenever the two metrics have made a cross, the BTC price has observed a buy or sell signal. More specifically, whenever the 100-day EMA has crossed below the 350-day MA, the price has felt a bearish effect, while the reverse type of crossover has generally been bullish for the coin.
Also, a peculiar trend that has historically been seen with the 100-day EMA is that whenever this indicator breaks the 1 line, the BTC price forms a bottom (when the break is above) or top (when it’s below).
Recently, these Bitcoin taker buy/sell ratio lines have touched each other again. The bearish type of crossover seems to be forming here, as the 100-day EMA has dipped below the 350-day MA.
If the past instances of this crossover are anything to go by, BTC may soon see some downward push. The price has actually already slid down a bit in the last few days, but currently, it’s unclear if the crossover is already in effect or if the real decline is yet to come.
The 100-day EMA taker buy/sell ratio also looks to be plunging recently and the metric is now fast approaching the 1 level. If a break below takes place, then a local top may be confirmed for the price, if, again, the past pattern holds any relevance.
At the time of writing, Bitcoin is trading around $23,900, up 1% in the last week.
BTC seems to have declined in the last few days | Source: BTCUSD on TradingView
Featured image from Mark Basarab on Unsplash.com, charts from TradingView.com, CryptoQuant.com