Outflows on Bitcoin Exchanges Suggest Rally Could Be Just Getting Started
Inflows and outflows on Bitcoin exchanges are still a great tool to see what investors are doing with their money. Looking at the exchange net flows this time around, with the market on another upswing, portrays a very encouraging scenario. This is due to the fact that bitcoin outflows continue to outnumber bitcoin inflows.
The price of bitcoin has been rising over the past week. The rally that began on Monday continued throughout the week, with the digital asset ultimately breaking above $47,000 for the first time in three months. Since then, speculation has proliferated in the sector as to how long such a rebound may persist. As a result, measurements such as exchange inflows and outflows will be used by investors to evaluate whether they are buying or selling.
In the case of bitcoin, the odds are in favor of a long-term uptrend. On-chain data suggests that outflows continue to outnumber inflows by a substantial margin. According to a study published by Glassnode Alerts, bitcoin inflows were $7.9 billion last week, but $9.5 billion worth of bitcoin left centralized exchanges. This resulted in a -$1.5 billion negative net flow.
This type of data indicates that investors are selling more than they are purchasing. Given the enormous amount of currencies leaving the exchanges, it’s likely that investors will want to hold their coins rather than sell during this period.
As a result, because more BTC is being removed from exchanges than is being sold, there is less supply in the open market, resulting in fewer coins available for demand, resulting in a higher value.
The net flows of bitcoin aren’t the only indicator that the surge is just getting started. Tether (USDT) now has the biggest bitcoin pairing of any cryptocurrency on the market. This is generally a clear link between how investors move their Tether in and out of exchanges and the price of bitcoin.
Tether inflows have also increased over the recent week. Inflows totaled $4.4 billion, while Tether was moved to exchanges for $4.9 billion.
It’s assumed that the volumes being shifted to the exchanges are being used to buy cryptocurrencies like bitcoin.
Given this, as well as the fact that bitcoin exchange outflows continue to rise, the market is under substantial purchase pressure. Bitcoin may be only getting started on current rise, given the accumulating pattern among bitcoin investors.
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