On-chain data shows that the Bitcoin exchange netflow has remained at negative readings lately, which could play in the asset’s favor.
Exchanges have seen net Bitcoin outflows lately
An analyst in a CryptoQuant Quicktake after explained that investors have recently withdrawn their coins from exchanges. The relevant indicator here is the ‘exchange netflow’, which measures the net amount of Bitcoin currently moving in or out of the wallets of all centralized exchanges. The value of the statistic is calculated by subtracting the outflow from the inflow.
When the value of this indicator is positive, the inflow is currently greater than the outflow; hence there is a net amount of coins going to these platforms.
Since one of the main reasons why holders want to deposit their coins on exchanges is sales-related purposes, such a trend could have bearish consequences for the cryptocurrency.
On the other hand, negative readings suggest that holders are currently making net withdrawals. When these types of trends continue, it can be a sign that there is accumulation in the market, which can obviously have a bullish effect on the price in the long run.
Here is a chart showing the trend in the Bitcoin exchange network flow over the past few months:
The value of the metric seems to have been red in recent days | Source: CryptoQaunt
As shown in the chart above, the Bitcoin exchange’s net flow was positive during the crash earlier this month, implying that net deposits had taken place.
This inflow is said to have come from the investors who participated in the sell-off and from the panic selling just after the sell-off took place. This indicator tracks the combined data for both spot and derivatives platforms, so some of this inflow will undoubtedly come from those looking to speculate on the futures market.
It didn’t take long for the net flow to turn negative, however, and the benchmark has been maintained in this region ever since. This could indicate that holders have been continuously taking their coins from these central entities over the past few days.
As analyst James V. Straten has done pointed out on X, many of these outflows are only from the Bybit platform.
Looks like the metric's value has plunged recently | Source: @jimmyvs24 on X
The total balance on the stock market has plummeted as there has been a massive outflow of $300 million. These latest withdrawals are the largest the stock market has ever seen.
Bitcoin rises after news of Grayscale’s success
Has grayscale found success in its lawsuit against the US Securities and Exchange Commission (SEC). The Bitcoin market has reacted quickly as the cryptocurrency has surged towards the $27,500 mark.
BTC has rocketed up during the past day | Source: BTCUSD on TradingView
If the market-wide negative net flows were true due to market purchases, then this sharp recovery could have something to hold onto, as it would mean it was built on a strong accumulation base.
Featured image from iStock.com, charts from TradingView.com, CryptoQuant.com, Glassnode.com