On-chain data suggests that Bitcoin whales could be piling on the downside as spot exchanges recently saw their largest drawdown of 2024.
Bitcoin exchange Netflow recently turned red
As one analyst pointed out in a CryptoQuant Quicktake joba large number of coins have left spot exchanges recently. The relevant indicator here is the “net exchange flow”, which tracks the net amount of Bitcoin entering or leaving wallets attached to all centralized exchanges.
When the value of this metric is negative, it means that outflows are currently exceeding inflows and a net amount is leaving the wallets of these platforms. This type of trend could imply that investors are looking to hold for the long term, which can naturally be bullish for BTC.
On the other hand, a positive indicator suggests that holders are making net deposits to exchanges. The exact implication of such a trend on cryptocurrency depends on the type of exchange receiving these deposits, cash or derivatives.
In the case of cash markets, capital inflows can be bearish for the price, as they suggest that investors may be looking to sell. Capital inflows into derivatives are not so straightforward, but they do lead to higher prices. volatility for the asset, as they imply that traders are looking to open more risky positions in the market.
Now here is a chart that shows the trend of Bitcoin net exchange flow, especially for spot exchanges since the beginning of the year:
Looks like the value of the indicator has seen a sharp red spike recently | Source: CryptoQuant
As the chart shows, Bitcoin’s net exchange flow for spot exchanges saw a massive negative increase during the latest price drop, potentially suggesting that some major investors accumulate.
In total, this net outflow spike corresponds to over 46,000 BTC leaving these platforms, equivalent to over $2.6 billion at the cryptocurrency’s current exchange rate.
Given the timing of the releases, it is possible that whales are banking on the price rising from these recent lows as they move their coins into self-custody.
It is not only the spot platforms that are seeing this trend either, as another as to pointed out that the net flow to derivatives exchanges also saw strong negative increases.
The value of the metric appears to have been quite negative in recent days | Source: CryptoQuant
These net outflows from derivatives platforms could suggest that whales are looking to reduce their risk. But since these coins have not entered spot trading, these derivatives users may consider holding them for an extended period, following the lead of spot whales.
BTC Price
At the time of writing, Bitcoin is trading at around $57,200, down nearly 9% over the past week.
The price of the coin seems to have overall been moving sideways during the last few days | Source: BTCUSD on TradingView
Featured image by Dall-E, CryptoQuant.com, chart by TradingView.com
