Bitcoin Inflows Fall To 2020 Levels As Activity Remains Low

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Data shows that Bitcoin exchange inflows and outflows have contracted recently as market activity has remained low.

Bitcoin Exchange inflows and outflows continue to fall

According to the latest weekly report from Glasnode, BTC inflow volumes are now only around $350-$400 million per day. The “change inflowis an indicator that measures the total amount of Bitcoin currently being deposited by holders on centralized exchanges. Its counterpart is theexchange outflowAnd, of course, it tracks the volume exiting the exchange portfolios.

In general, during periods of high activity in the market, both indicators rise to high values ​​as a large number of investors make their respective moves. However, the price may react in certain directions depending on which of these metrics is currently higher.

Since one of the main reasons investors use exchanges is for selling purposes, inflows can outweigh Bitcoin outflows. On the other hand, a more dominant outflow may indicate that there is buying pressure in the market instead as investors withdraw their coins for accumulation.

Now, here is a chart showing the trend in Bitcoin exchange inflows and outflows over the past few years:

Bitcoin and Ethereum Exchange inflows and outflows

looks like both these metrics have declined in recent weeks | Source: Glassnode's The Week Onchain - Week 2, 2023

As can be seen in the chart above, Bitcoin exchange inflows and outflows have both been at high levels over the past few years, with their volumes remaining in the multi-billion dollar range. At the peak of the inflow in May 2021, between $2.8 billion and $3.5 billion per day entered stock market portfolios.

Recently, however, both the inflow and outflow have fallen sharply. Currently, inflow volumes are between $350 million and $400 million per day, which is a low not seen since 2020. Outflows have not quite dwindled to this level, possibly due to the fact that the collapse of FTX led to renewed interest in self-custody among investors, leading them to withdraw large sums from centralized platforms.

In the chart, data for the Ethereum exchange flows are also displayed. It appears that prior to May 2021, the dominance of the Bitcoin exchange stream was around 70%, meaning that the combined volumes of Ethereum inflows and outflows accounted for 30% of the total between ETH and BTC over the period.

But since May 2021, the share of Ethereum flows has increased significantly as the dominance of ETH inflows and outflows is now 42%. This trend suggests that relative trading interests in ETH have increased over the past year and a half, while BTC has lost some mind share.

Although, in pure numbers, both cryptocurrencies have seen little market activity lately as both their inflows and outflows on the exchange have quite low values.

BTC price

At the time of writing, Bitcoin is trading around $17,200, up 3% over the past week.

Bitcoin price chart

The value of the asset seems to have surged in the last couple of days | Source: BTCUSD on TradingView

Featured image of Kanchanara on Unsplash.com, charts from TradingView.com, Glassnode.com

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