Bitcoin Exchange Outflow Suggests Rally May Only Begin
The inflows and outflows of Bitcoin exchanges continue to be one way of determining what investors do with their coins. These usually follow a trend in a bull or bear market and diverge when there is a change in the market. This time, with the market once again in another wave, looking at net exchange flows paints a rather positive picture. This is because bitcoin outflows continue to dominate in this regard.
Bitcoin outflow is increasing
For the past week, the price of bitcoin has been on an upward trend. This recovery that started Monday raged throughout the week, with the digital asset finally breaking above $47,000 for the first time in three months. Since then, there has been plenty of speculation about how long such a recovery could take. As such, investors will look at statistics such as stock market inflows and outflows to determine whether investors are buying or selling.
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For bitcoin, the data favored a continued rally. Looking at on-chain data, outflows still far exceed inflows. Glassnode Alerts posted a report showing that while inflows topped $7.9 billion last week, there was a total of $9.5 billion worth of bitcoin exiting centralized exchanges. This resulted in negative net flow of -$1.5 billion.
🚨 Weekly on-chain exchange flow 🚨#Bitcoin $BTC
➡️ $7.9 billion in
⬅️ $9.5 Billion Off
📉 Net Power: -$1.5 Billion#Ethereum $ETH
➡️ $5.1 billion in
⬅️ $6.8 Billion Off
📉 Net Power: -$1.7B#Tether (ERC20) $USDT
➡️ $4.9 billion in
⬅️ $4.4 Billion Off
📈 Net Power: +$451.8Mhttps://t.co/dk2HbGwhVw
— glassnode alerts (@glassnodealerts) Apr 4, 2022
Data like this suggests that investors are selling less than they are buying. As such high volumes exit the exchanges, investors are expected to rather collect than sell their coins during this period. Therefore, since more BTC is removed from exchanges than is sold to be sold, there is less supply in the open market, leaving fewer coins available for demand, leading to a higher value.
Tether shows better stats
Bitcoin’s net flows aren’t the only thing to suggest that the rally is still in its early stages. Now Tether (USDT) has the largest peg of any other cryptocurrency on the market with bitcoin. This usually provides a direct correlation to how investors move their Tether in and out of the exchanges to the price of bitcoin.
BTC drops to $46K | Source: BTCUSD on TradingView.com
for the last week, Tether inflow had also contracted. A total of $4.4 billion in inflows was recorded, while a total of $4.9 billion in Tether was moved to exchanges. It is believed that such volumes moved to the exchanges are intended to buy cryptocurrencies such as bitcoin.
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Given this and the fact that bitcoin exchange outflows continue to grow, there is still significant buying pressure in the market. Coupled with the accumulation trend among bitcoin investors, bitcoin may only be starting this rally.
Featured image from The Financial Commission, chart from TradingView.com