Bitcoin price sharply exceeded $40,000. Market participants expect a new round of the bullish cycle, basing their predictions on these two market indicators.

According to the analyst company CryptoQuant, the cryptocurrency market undergoes a decrease in the fund flow ratio on crypto exchanges. Fund Flow Ration is the total BTC amount flowing into or out of exchange divided by the total BTC amount transferred on the whole bitcoin network. The ratio helps to evaluate ​​the share of bitcoins involved in exchange transactions. It also helps estimate the proportion of transactions that take place outside of crypto exchanges, for example, on OTC and P2P marketplaces.

"Knowing the number of funds currently involved in trading can help you understand market volatility."

The decrease in the ratio is associated not only with a decrease in the volume of deposits and withdrawals of bitcoins from crypto exchanges, but also with the growth of over-the-counter transactions. According to the same CryptoQuant, the total amount of BTC transferred on the bitcoin network is growing. This situation may indicate a decrease in trading activity against the background of a decrease in volatility, while OTC transactions, most likely, on the contrary, demonstrate an increase in activity.

"BTC exchange reserves continue to drop.  Sentiment appears to be to buy and hold and we continue to see it in the charts."

This could indicate a new bullish cycle for bitcoin. A similar situation was observed in August 2020 on the eve of a powerful leap in the bitcoin rate.

"Someone is buying BTC a lot. 99% of transactions are happening outside of the exchanges. Possibly OTC deals. If big names announce their buying, bears could be in a trouble. I'm not sure about short-term price moving tho," Ki Young Ju, CEO of CryptoQuant, wrote in a blog post.

Over the past week, bitcoin rose more than 20% and exceeded $ 40,000.