Despite the downward trend, Bitcoin continues to flow out of exchanges
Data shows that exchanges have observed large amounts of Bitcoin leaving exchanges in the year 2022 so far, despite the downtrend the crypto has experienced.
Bitcoin All Exchanges Netflow has been negative over the past few months
According to the latest weekly report from Arcane Research, BTC saw the highest outflows in June since last November.
“Exchange netflow” is an indicator that measures the net amount of Bitcoin moving into or flowing out of wallets on all exchanges. The metric’s value is simply calculated by taking the difference between the inflows and outflows.
When the value of this indicator is negative, it means that a net number of coins are leaving centralized exchange wallets right now. Such a trend, when extended, can prove to be bullish for the cryptocurrency as it can be a sign of accumulation by investors.
On the other hand, values of the metric greater than zero suggest that holders are depositing a net amount of BTC to exchanges at the moment. If these cues are for selling purposes, the trend can have a bearish effect on the coin’s value.
Now, here’s a chart showing the trend in Bitcoin exchange net flows for each month of the year so far:
The value of the metric seems to have been quite negative recently | Source: Arcane Research's The Weekly Update - Week 33, 2022
As you can see in the graph above, exchanges saw a decent amount of net Bitcoin outflows in the January to April period, but in May the trend reversed.
May saw a significant number of coins enter exchange wallets, but these influxes did not last too long. The LUNA crash that took place at the end of that month led to the collapse of many of the largest lenders and exchanges in the crypto market.
These platforms that freeze withdrawals caused panic in the market and the awareness of crypto custody grew stronger. In June, 119,000 BTC left exchanges, the largest amount since November 2020.
The months of July and August have so far continued with the trend, and observed fairly large net outflows (but not as large as June’s).
The report notes that recent Bitcoin outflows suggest that confidence around centralized lenders and exchanges is lower now among crypto hodlers.
BTC price
At the time of writing, Bitcoin’s price is hovering around $21.6k, down 8% in the last seven days.
Looks like the value of the crypto has been mostly moving sideways in recent days | Source: BTCUSD on TradingView
Featured image from André François McKenzie on Unsplash.com, charts from TradingView.com, Arcane Research
