Bitcoin Exchange Outflows Spike, Bullish Sign?
On-chain data shows that the Bitcoin exchange has seen a significant increase over the past day, a sign that could be bullish for the price.
Bitcoin Exchange Outflows have observed a large increase today
As pointed out by an analyst in a CryptoQuant post, a total of 2,138 BTC has been withdrawn from exchanges in the last day. The “Exchange Outflow” is an indicator that measures the total amount of Bitcoin withdrawn from the wallet of all centralized exchanges.
When the value of this metric has an elevated value, it means that the investors are transferring a large number of coins from these platforms. Typically, holders withdraw their BTC from exchanges to hold them for longer periods in offsite wallets. For this reason, elevated values of this metric can be a sign of accumulation, and can therefore be bullish for the cryptocurrency’s price.
On the other hand, the low values of the indicator suggest that there are not many withdrawals happening in the market right now. Such a trend can be either bearish or neutral for the asset, depending on how the “stock supply”, the counterparty indicator, is currently behaving.
Holders usually deposit to exchanges for sale-related purposes, so when the IPO has high values, it suggests that the investors may participate in a sale of the asset. Naturally, this can have bearish consequences for the price.
Now, here is a chart showing the trend in the Bitcoin exchange, as well as inflows, over the last day:
The value of the outflow seems to have been quite high in recent hours | Source: CryptoQuant
As shown in the graph above, the Bitcoin exchange has registered a very strong peak in the last few hours. In total, investors have withdrawn 2,138 BTC (about $60.6 million at current exchange rates) from exchanges with this peak.
Since these large withdrawals have come while the price of the cryptocurrency has been in the lower $28,000s (which are relatively low levels considering that the price had been above $30,000 just a few days ago), it is possible that these transfers from exchanges is a sign of fresh buying taking place in the market.
From the diagram it is also visible that the currency inflows have remained at low values at the same time, which means that no deposits are made to counteract these withdrawals. This may mean that there is no additional appetite to sell at current levels for the time being.
This recent unhindered Bitcoin rally could be a positive sign for the market, as it means there are at least some major investors in the sector who are viewing today’s prices as a discounted buying opportunity, and not a sign of more decline to come.
BTC price
At the time of writing, Bitcoin is trading around $28,000, down 9% in the last week.
Looks like the value of the asset has been plunging in the last few days | Source: BTCUSD on TradingView
Featured image from Dmitry Demidko at Unsplash.com, Charts from TradingView.com, CryptoQuant.com
