Bitcoin sees biggest influx in 6 months, sign of profit?
On-chain data shows the Bitcoin exchange has recorded its biggest value in six months, a sign that profit-taking may be ongoing after the price surge.
Bitcoin Exchange inflows have surged to a six-month high
According to data from the analysis company at the chain Sentiment, a large number of coins have entered into exchange recently. The relevant indicator here is the “exchange flow balance”, which measures the net amount of Bitcoin moving into or out of the wallet of all centralized exchanges.
When the value of this metric is positive, it means that the inflows taking place in the market are currently overwhelming the outflows and a net number of coins are entering exchange wallets.
As one of the main reasons a holder may deposit to an exchange is for sales-related purposes, such a value can have a bearish effect on the price.
On the other hand, the indicator with a value less than zero suggests that the supply is being pulled out of the exchanges right now. This type of trend, when extended, can be a sign that investors are hoarding the asset at the moment and can therefore be bullish for the BTC price.
Now, here is a chart showing the trend of Bitcoin exchange flow balance over the past month:
Looks like the value of the metric has been quite positive in recent days | Source: Santiment on Twitter
As shown in the graph above, the Bitcoin exchange flow balance has shot up above the zero mark over the past couple of days. During this surge, a total of around 21,524 BTC ($524.9 million at current exchange rates) has been deposited into these platforms.
This value of net inflow is the highest observed since September last year, around six months ago. These huge deposits have come after the price of the cryptocurrency has observed a strong uptrend and has crossed over the $24,000 level.
The chart also shows data for another indicator, the “supply on exchanges,” which tells us the percentage of the total circulating Bitcoin supply currently held in exchange wallets.
Naturally, this metric has also shot up as the engagements have taken place. According to this indicator, around 0.11% of the entire BTC supply moved to exchanges with these deposits in just a single day.
As investors have made these transfers to bullish exchanges, it seems reasonable to assume that at least some of these deposits are being made to take advantage of the current profit-taking opportunity.
So far, the price has continued to rise to higher levels despite these cues, suggesting that the market may have been more than comfortable absorbing this selling pressure. However, if the profit-taking continues, the price may face a short-term downside.
BTC price
At the time of writing, Bitcoin is trading around $25,900, up 16% in the past week.
BTC has surged over the last two days | Source: BTCUSD on TradingView
Featured image from Thought Catalog on Unsplash.com, Charts from TradingView.com, Santiment.net
