Looking back, March 2020 was a major turning point and catalyst for Bitcoin. Looking at the balance sheet of the exchange, the net outflow has been constant over the past 2 years.

The two most recent periods of significant inflows were just before Bitcoin’s local price peaks in April and November 2021.

The month leading up to these peaks all featured net currency inflows (March and October 2021).

January is the month with the largest outflow since September 2021. Tracking exchange traded cash flow dynamics can help track market participants’ demand sentiment and when it will fundamentally change.

Monthly net BTC flow on exchanges | Source: Glassnode

The cash flow accumulated over 90 days on the stock market has moved continuously in price over the past year. In the chart below, the right-hand axis is inverted to show how declining net FX flows are correlated with rising prices and vice versa.

In January, the 90-day cumulative net outflow changed trend as more bitcoin flowed out of exchanges, indicating increased buying demand compared to the previous month and has pushed the price higher over the past few days. Additionally, this is because long-term keepers and whales have increased their aggregation in recent weeks.

BTC price and 90-day cumulative net cash flow | Source: Glassnode

Looking at the change in the balance of the stock market in 30 days, this number has fallen sharply in the last 2 weeks.

Exchange balance change in 30 days | Source: Glassnode

Another way to track exchange volume dynamics is to look at exchange net flows versus adjusted supply estimates. The adjusted offer removes coins that haven’t moved for 7 years, provided the number belongs to Satoshi and the coins are lost. The current adjusted supply is around 15.58 million bitcoins, which is 82.2% of the circulating supply.

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