Bitcoin’s recent Auditor Report has revealed that four of the world’s best crypto exchanges are running trends that negate Bitcoin inflows trends seen on all other major exchanges. The general market overview reveals that there has been a net negative inflow for the crypto market leader across the crypto space, but the four outliers have featured an almost equal sum of net positive inflow.
About thirty days ago, the net outflows across the crypto market almost reached the $1.8 billion mark, with the bear market since mid-2021 bringing over 45,000 Bitcoins worth of withdrawals with it.
The only four exemptions to this trend are seen in popular exchanges like Binance and the U.S.-based Bittrex exchange. Also, Bitfinnex and popular exchange FTX fall into the category of these outliers. The total inflows on these four exchanges exceed 200 thousand bitcoins, as expressly shown by Glassnode, one of the world’s most renowned sources for blockchain analytics.
Further evidence from the Auditor’s report showed that the outflows over the same period had exceeded 253 thousand Bitcoins from every other exchange recorded.
Huobi’s loss is FTX’s gain. The latter exchange has increased its holding by multiples of three, while Huobi abandoned his bitcoins in favor of smaller coinage after the dramatic price shift last summer. The sudden change in the Bitcoin (BTC) holdings of two major cryptocurrency exchanges have continued for some time. Whereas FTX’s balance is now at 103200 BTC, up from 16999 earlier this year, Huobi’s holdings reduced to just 12300 – around 6% of what it used to be, holding over 400k back then!
The financial drain of the recent bear market has been felt by investors, with net outflows persisting since last year and spikes occurring in August. On January 11th, there was one major transaction – an acquisition that accounted for 100 million dollars worth.
While many people might think that the low inflows are due to a lack of interest from investors, Glassnode thinks of this relatively calm market condition as largely caused on account of the current level of uncertainty within our crypto trading industries. They suggest there has been some movement towards hedging risks through mostly derivative trades instead – which helps explain why things haven’t changed much for those who want physical bitcoins (or other assets) themselves rather than just getting involved through options contracts or futures spreads.
The change in an investment’s stock price is often used as a measure of what people think about that coin. There are two things you should know, though: inflows reveal some future selling pressure, while outflows suggest that you hodl onto your investments instead of liquidating them like most investors would do before investing again (which may be good news!).
One way to look at this data is to compare the bitcoin inflow with the realized and implied price of bitcoin. According to data gotten from coingecko, the price of the bitcoin that has not been brought on-chain was around $24,100 for each bitcoin. This could only mean one thing; that hodlers are enjoying a 64% profit on each bitcoin.
The implied value, which is seen as the fair market value of bitcoin, was trading at around $38,421 at the time of writing. If you bought bitcoin over the last 155 days, you would be making a loss of between 7% and 15%, as the average price of on-chain bitcoin, as seen on Glassnode, over the last 155 days has averaged around $46,000.
If we look at another metric other than they realized to implied value, we see a similar trend. The metric used here is the profit and loss (PnL) ratio of sellers. This metric, represented by a curve, has been flat since 2021 started. If there is anything we can imply from this, it is that the long-term holders of bitcoin are getting frustrated with selling smaller positions. While we have not seen the level of long-term holder sell-off like other market bottoms have brought, there is a high risk that, at some point, both short-term holders and their long-term counterparts will experience a big capitulation.
Next direction of Bitcoin?
Can anyone really predict where bitcoin will be in the next week? Definitely not. Surprisingly, with high inflation facing the U.S. dollar, there are a thousand reasons to be critical of bitcoin’s dip during this season. It is supposed to be a store of value and a hedge against the dollar, just like gold, but it has not lived up to the hype so far. Bitcoin’s all-time high this year is just a little short of $44,000, and instead of the just concluded bitcoin conference that was held in Miami to lift sentiment, its lack of a spark meant bitcoin would not have a propeller for the time being. Perhaps the silver lining is seen as Bitcoin’s 50-week EMA broke out some days ago. We take solace in the fact that we can profit from both price movements on exchanges like Redot.com.
