Definition ∞ An exchange reserves spike indicates a rapid and substantial increase in the amount of a specific cryptocurrency held on centralized exchanges. This event signifies a sudden influx of digital assets onto trading platforms, often suggesting that a significant number of holders intend to sell their assets. Such a movement increases the available supply on exchanges, potentially leading to increased selling pressure and a downward impact on price. It is typically viewed as a bearish signal, reflecting a shift in market participant behavior.
Context ∞ News reports often feature exchange reserves spikes as a key metric for understanding immediate market sentiment and potential price instability. Traders and analysts closely monitor these spikes for cryptocurrencies like Bitcoin and Ethereum, as they can precede significant market corrections. A notable spike prompts questions about the underlying reasons for such large-scale deposits.
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