On-chain data shows that Bitcoin exchanges have recorded the largest outflow since the collapse of crypto exchange FTX in November.
Related reading: Bitcoin investors are getting greedy for the first time since March 2022
Bitcoin Exchange Netflow shows deep negative readings
As one analyst noted in a CryptoQuant post, about 7,000 coins have left the exchange in this latest spike. The relevant indicator here is the “all exchanges netflow”, which measures the net amount of Bitcoin leaving or entering the wallets of all centralized exchanges. The value of the metric is calculated by taking the difference between the inflow (the coins that come in) and the outflow (the coins that go out).
When the indicator has a positive reading, inflows overwhelm outflows and a net number of coins are deposited on exchanges. Since one of the main reasons investors deposit on exchanges is for selling purposes, this trend could have bearish implications for the price of the cryptocurrency.
On the other hand, negative values imply that there is currently a net amount of supply being taken from these platforms. Generally, holders withdraw their coins from exchanges to keep them in personal wallets for extended periods of time. Thus, such metrics can indicate that investors are currently accumulating, which can have a bullish effect on the price.
Now, here is a chart showing the trend in Bitcoin All Exchange net flow over the past few months:
Looks like the value of the metric has been quite negative recently | Source: CryptoQuant
As can be seen in the chart above, the Bitcoin exchange grid flow recorded a deep negative spike over the past day. This outflow amounted to approximately 7,000 BTC, making these platforms’ wallets the largest value the metric has seen since the FTX crash back in November last year.
The chart shows that the aftermath of FTX’s collapse has produced some substantial outflows. The reason behind this is that a well-known exchange like FTX going bankrupt created fear among investors and made them more aware of the risks of keeping their coins in centralized platforms.
Naturally, these holders fled exchanges en masse (causing the net flow to plummet into the red) so they could store their Bitcoin in remote wallets, the keys they own.
Interestingly, the last negative netflow spike was recorded as Bitcoin observed a sharp rally. Usually, inflows are more likely to be seen during periods like now, when investors rush to take some profits.
So instead of making these big outflows, investors are showing signs that they are bullish on Bitcoin in the long run and feel that the current rally has even more to offer.
That would only be if these investors did the withdrawals accumulation in mind. In the scenario that they transfer these coins for sale through over-the-counter (OTC) deals, Bitcoin could feel a bearish impulse instead.
BTC price
At the time of writing, Bitcoin is trading around $23,100, up 8% over the past week.
BTC moves sideways | Source: BTCUSD on TradingView
Featured image from Thought Catalog at Unsplash.com, charts from TradingView.com, CryptoQuant.com