Bitcoin Exchange Outflows suggest that the market is in full accumulation mode
Since bitcoin fell below $20,000, investors across all spheres have taken this as an opportunity to fill their wallets. This accumulation trend was not readily apparent at first given the high volatility triggered by the FOMC meeting. But now that the market has settled into something of a normal range, the accumulation trend seems to be in full swing.
Exchange Outflows are growing
Over the past week, bitcoin exchange outflows have increased. They had continued to outpace daily inflows, leading to negative net flows across centralized exchanges. Primarily, this accumulation trend had been led by whales, where a single instance, a bitcoin whale, had added around 5,000 BTC to its holdings in a matter of weeks.
The overall figures for inflows and outflows in centralized exchanges also speak for this. In the last seven days, a total of $3.4 billion in BTC flowed into exchanges with outflows coming in at $4.9 billion. This means a net negative flow of $1.4 billion for the week.
🚨 Weekly exchange flow on the chain 🚨#Bitcoin $BTC
➡️ $3.4 billion in
⬅️ $4.9 billion out
📉 Net flow: -1.4 billion dollars#Ethereum $ETH
➡️ $1.4 billion in
⬅️ 1.5 billion dollars out
📉 Net flow: -90.0 million dollars#Tether (ERC20) USD USD
➡️ $2.0 billion in
⬅️ 2.1 billion dollars out
📉 Net flow: -$71.2 million— glassnode alerts (@glassnodealerts) 10 October 2022
Tether (USDT) net flows for this week also point towards the same accumulation trend. With $2 billion in USDT flowing into exchanges for the 7-day period, it shows that investors are no longer seeking safety in stablecoins and are instead putting more skin in the game with bitcoin.
Large transactions were also prevalent during this time with $160.2 billion in large transactions recorded for the 7-day period. Exchange deposits has also reached a two-year low.
BTC settles below $20,000 | Source: BTCUSD on TradingView.com
Bitcoin may still be bearish
Despite the accumulation trend that has formed in bitcoin over the past week, investors still don’t seem to be fully convinced of a bullish future for the digital asset, especially in the short term. This is why the amount of active bitcoin supply had continued to rise over the past week.
This metric can often point to whether investors want to hold their coins or follow the selling trend. When the active supply is low, investors do not sell their coins. When it starts to climb, it shows that the sales are in full bloom.
Given that this has reached a new all-time high of 65.977%, it is difficult to say whether the accumulation trend will be enough to support the price of bitcoin. However, peaks like these have historically preceded an increase in the price of BTC, raising some hope for the digital asset.
Featured image from Forbes, chart from TradingView.com
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