Bitcoin is starting to indicate signs of a possible upward trend as several on-chain metrics are turning positive. These metrics, which frequently function indicators of future price movements, paint an image of growing optimism available in the market. One in all the important thing indicators supporting this positive outlook is the exchange inflow/outflow data, which reveals a shift in sentiment toward Bitcoin.
Despite some notable large-scale Bitcoin transfers by the defunct exchange Mt. Gox and significant movements by miners to over-the-counter (OTC) desks, the general inflow of Bitcoin into crypto exchanges has sharply declined prior to now few days.
Bitcoin Exchange Inflows See Sharp Drop
Based on a recent report by newsBTC, which analyzed data from Glassnode, Bitcoin’s sharp decline below $50,000 in early August was largely driven by an overreaction from short-term holders. This panic led to a big influx of Bitcoin into exchanges, increasing the selling pressure and contributing to the value drop.
Supporting this, data from CryptoQuant reveals that on August 5, BTC inflows to exchanges surged dramatically to 94,000 BTC. The trend continued with 49,000 BTC on August 6 and one other 51,370 BTC on August 7, further amplifying the selling momentum.
Interestingly, the inflows into exchanges have decreased substantially since then, signaling that the initial wave of selling could also be losing steam. CryptoQuant’s data from August 22 shows a marked reduction, with only 32,338 BTC entering exchanges, in comparison with 32,723 BTC withdrawn, indicating a shift in market sentiment.
Further corroborating this shift, data from IntoTheBlock indicates that the entire Bitcoin netflow across aggregated exchanges has turned negative, with a net outflow of three,560 BTC prior to now 24 hours and a negative 2,000 BTC over the past seven days. Although the difference between outflows and inflows is comparatively small, it represents the primary significant change in buying and selling dynamics because the starting of August.
What’s Next For BTC?
Historically, when more Bitcoin is withdrawn from exchanges than deposited, it suggests that investors are selecting to carry onto their assets reasonably than sell them, which is often a bullish signal.
On the time of writing, Bitcoin is trading at $61,000 and is up by 4.5% in seven days. Other on-chain metrics are providing a cautiously optimistic outlook for BTC, hinting at the opportunity of upcoming positive price motion. One such metric is IntoTheBlock’s “Bid-Ask Volume,” which currently shows a 3.93% shift towards the bid side.
This shift indicates a better volume of buy orders in comparison with sell orders, revealing that there are more buyers than sellers available in the market. The rise in buying activity suggests that a growing variety of investors are anticipating an increase in the value of Bitcoin.
The futures market derivatives momentum has also flipped to a positive 0.75. This is especially a bullish signal, especially considering the Bitcoin price now finds itself at a brief squeeze.
Featured image created with Dall.E, chart from Tradingview.com