• On-chain data shows that Bitcoin’s spot and derivative exchange reserves have recently shot up, which could be a bearish sign for the price.
• The “exchange reserve” is an indicator that measures the total amount of Bitcoin that investors are depositing into wallets of centralized exchanges right now.
• An increase in the reserves of these platforms can suggest selling pressure is rising in the market, while a rise in the derivative reserves can lead to higher volatility.

Recent on-chain data has revealed an interesting trend in the Bitcoin market – the spot and derivative exchange reserves have both shot up in recent days, a sign that could be bearish for the price.

The “exchange reserve” is an indicator that measures the total amount of Bitcoin that investors are depositing into wallets of centralized exchanges right now. This metric has two versions; one is for the spot exchanges, while the other is for the derivative platforms.

Typically, investors deposit to spot exchanges for selling purposes, so an increase in the reserves of these platforms can suggest that selling pressure is rising in the market. This can lead to a bearish signal for the price, as it means that more Bitcoin is being sold than bought. On the other hand, investors use derivative exchanges for opening positions on the futures market. A rise in the derivative reserves can lead to higher volatility in the market, with the effect on the price being in either direction.

A CryptoQuant post recently pointed out that the open interest and the funding rates were also heating up in the BTC market. This was confirmed by a chart that shows the trend in these Bitcoin exchange reserves over the last month. The values of all the metrics seemed to have seen a rise in recent days, indicating that investors have been making deposits to these platforms.

Overall, the increased spot reserves suggest an elevated selling pressure in the market, while the derivative reserves imply an overleveraged position in the market, leading to potential volatility. It is important to note that this is all speculation for now, and the actual effect on the price of Bitcoin is yet to be seen.