On-chain data shows the Bitcoin exchange outflows have seen a significant spike during the past day, a sign that may be bullish for the price.
Bitcoin Exchange Outflows Have Observed A Large Spike Today
As pointed out by an analyst in a CryptoQuant post, a total of 2,138 BTC has been taken out of exchanges during the last day. The “exchange outflow” is an indicator that measures the total amount of Bitcoin that’s being withdrawn from the wallets of all centralized exchanges.
When the value of this metric has an elevated value, it means the investors are transferring out a large number of coins from these platforms. Generally, holders withdraw their BTC from exchanges for holding onto them for extended periods in offsite wallets. Because of this reason, elevated values of this metric can be a sign of accumulation, and hence, can be bullish for the cryptocurrency’s price.
On the other hand, the low values of the indicator imply there aren’t many withdrawals happening in the market right now. Such a trend can be either bearish or neutral for the asset, depending on how the “exchange inflow,” the counterpart indicator, is behaving at the moment.
Holders usually deposit to exchanges for selling-related purposes, so when the exchange inflow has high values, it suggests the investors may be participating in a selloff of the asset. Naturally, this can have bearish consequences for the price.
Now, here is a chart that shows the trend in the Bitcoin exchange outflow, as well as in the inflow, over the last day:
The value of the outflow seems to have been quite high in recent hours | Source: CryptoQuant
As displayed in the above graph, the Bitcoin exchange outflow has registered a very sharp spike in the last few hours. In total, the investors have withdrawn 2,138 BTC (about $60.6 million at the current exchange rate) from exchanges with this spike.
Since these large withdrawals have come while the price of the cryptocurrency has been in the lower $28,000 values (which are relatively low levels considering the price had been above $30,000 just a few days ago), it’s possible that these transfers out of exchanges are a sign of fresh buying taking place in the market.
From the chart, it’s also visible that the exchange inflows have remained at low values at the same time, meaning that there aren’t any deposits happening to counteract these withdrawals. This may imply that there isn’t any additional appetite for selling at the current levels for now.
This fresh unimpeded Bitcoin accumulation can be a positive sign for the market, as it means that there are at least some large investors in the sector who view the current prices as a discounted buying opportunity, and not as a sign of more decline to come.
At the time of writing, Bitcoin is trading around $28,000, down 9% in the last week.
Looks like the value of the asset has been plunging in the last few days | Source: BTCUSD on TradingView
Featured image from Dmitry Demidko on Unsplash.com, charts from TradingView.com, CryptoQuant.com