Data from the chain suggests that the Bitcoin whales may have participated in a significant amount of buying as the market panicked over the recent lows.
Bitcoin Exchange Netflow has been quite negative lately
An analyst in a CryptoQuant Quicktake post pointed out that the exchanges have recently seen outflows. The indicator of interest here is the ‘exchange netflow’, which tracks the net amount of Bitcoin entering or leaving the wallets of all centralized exchanges. The value of the statistic is calculated by subtracting the outflow from the inflow.
When the indicator has a positive value, the inflows overwhelm the outflows and a net amount of coins moves to these platforms.
Since one of the main reasons why investors want to deposit their BTC on the exchanges is for selling purposes, this trend could have bearish implications for the cryptocurrency.
On the other hand, the negative measure implies that withdrawals are taking place, which could be a sign that holders are currently accumulating. Such a trend could obviously be bullish for the asset’s price.
Here is a chart showing the trend in Bitcoin exchange netflow over the past year:
The value of the metric has been quite negative in recent days | Source: CryptoQuant
The chart above shows that the Bitcoin exchange netflow has recently seen some deep negative spikes. This suggests that there has been a large outflow from these platforms.
Interestingly, these pullbacks occurred as BTC slid towards the $41,600 level, implying that some investors may have been buying while the rest of the market panicked over the decline.
Given the large size of the deposits, it is likely that whale entities were behind them. The fact that these giant holders were willing to take the risk of accumulating at these recent prices could be a positive sign for the rally to continue.
Microstrategy also just announced its massive $615 million BTC acquisition, which could obviously be another bullish sign for the coin. However, the net exchange flows that occur before the announcement are interesting.
It’s hard to be sure if there’s any connection between the two, but one possibility is that the whales who bought at these recent lows knew about the acquisitions in advance.
Another, and perhaps the most likely explanation, is that these large investors were looking for an entry point into the assets in anticipation of potential ETF approvals, and the dip provided a good opportunity to do so.
Be that as it may, it appears that the whales’ moves have paid off so far, as the Bitcoin price has recovered since its lows (although the recovery hasn’t been too strong yet).
BTC price
Bitcoin has recovered as high as $43,800 in the past day, but the value has since fallen again and is now hovering around $42,800.
BTC has overall moved sideways during the last few days | Source: BTCUSD on TradingView
Featured image by Todd Cravens on Unsplash.com, charts from TradingView.com, CryptoQuant.com
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