Bitcoin Exchange Outflows Indicate That the Rally May Be Just Getting Started
Bitcoin exchange inflows and outflows continue to be a proxy for investor behavior. These typically follow a trend in either a bull or bear market and diverge when the market changes.
This time around, with the market reviving, an examination of the exchange net flows reveals a very optimistic picture. This is because bitcoin outflows continue to be the primary source of funds in this space.
Bitcoin’s price has been steadily increasing over the last week. This week’s comeback, which began on Monday, saw the digital asset eventually breach over $47,000 for the first time in three months. Since then, speculations have abounded in the space about the duration of such a recovery. As such, investors will monitor exchange inflows and outflows to see if investors are buying or selling.
For bitcoin, the odds have been stacked in favor of a sustained ascent. On-chain data reveals that outflows continue to outnumber inflows by a substantial margin. While inflows totaled $7.9 billion during the last week, a total of $9.5 billion worth of bitcoin left controlled exchanges. This resulted in a -$1.5 billion negative net flow.
This kind of data indicates that investors are selling more than they are purchasing. Given the enormous amount of coins leaving exchanges, it is likely that investors would opt to collect their coins rather than sell them during this period. As a result of the fact that more BTC is being removed from exchanges than is being moved to be sold, there is less supply in the open market, resulting in fewer coins available for demand, which results in a higher value.
Bitcoin’s net flows are not the only indicator that the surge is still in its infancy. Tether (USDT) now has the greatest pairing with bitcoin or any other cryptocurrency on the market. This often shows a clear link between how investors move their Tether in and out of exchanges and the price of bitcoin.
Tether inflows have also increased significantly over the recent week. A total of $4.4 billion in inflows were observed, while $4.9 billion Tether was transferred to exchanges. It is assumed that large quantities are being transferred to exchanges in order to purchase cryptocurrencies such as bitcoin.
Given this, plus the fact that bitcoin exchange outflows continue to climb, the market remains under substantial purchase pressure. When combined with the accumulation tendency among bitcoin investors, it seems as if bitcoin is only getting started on its surge.