August 5, 2021

Worrying Sign for Bitcoin in the Short-Term: Exchanges Netflows

1 min read

Some fretting signs are starting to stand for bitcoin’s price, at least in a short-term time frame. That’s according to a widely known expert.

  • The rate for BTC has actually been wobbly recently, with it being unable to decisively break out in any direction.
  • Last week, we saw bitcoin dipping as low as $31K just to recover and touch $38,500 days later.
  • Now, however, the main cryptocurrency is trading at around $35,500 for a 4% loss on the day.
  • Commenting on the most recent cost action was Ki Young Ju, the CEO at crypto analytics company CryptoQuant.

One thing that makes me concerned about BTC is exchange netflows. There are many bitcoins are streaming into exchanges recently however the trading volume is still relatively low. BTC requires more trading volume to absorb increasing exchange inflows.

exchange_netflows_btc
  • Source: CryptoQuant To clarify, exchange inflows and outflows are important to keep track of because they reveal the short-term capacity of selling.
  • If there are numerous bitcoins sitting on exchanges, this implies that there are lots of bitcoins that can be sold reasonably rapidly – – bigger investors do not keep their bitcoins on exchanges unless they wish to have the ability to get rid of them rapidly.
  • On the other hand, if there are larger outflows, this implies that individuals are moving their BTC out of the exchange to hot or cold storage, potentially suggesting a less substantial intent to sell.