On-chain data shows Bitcoin exchanges have registered their most significant outflows since the collapse of crypto exchange FTX back in November.
Related reading: Bitcoin Investors Get Greedy For First Time Since March 2022
Bitcoin Exchange Netflow Shows Deep Negative Values
As analysts in the CryptoQuant post pointed out, around 7,000 coins have left the exchange in this latest spike. The relevant indicator here is “all exchanges netflow,” which measures the net amount of Bitcoin leaving or entering the wallets of all centralized exchanges. The metric value is calculated by taking the difference between inflows (coins coming in) and outflows (coins moving out).
When the indicator has a positive value, the inflow exceeds the outflow, and the number of coins stored in the exchange. As one of the main reasons for investors to stock exchanges is for selling purposes, this trend could have bearish implications for crypto prices.
On the other hand, a negative value indicates that the amount of net supply is currently being withdrawn from the platform. Generally, the money holder withdraws the coins from the exchange to hold the money for a long time in a private wallet. Thus, the value of the metric may signal that investors are accumulating now, which may have a bullish effect on the price.
Now, here is a graph showing the trend in Netflow of all Bitcoin exchanges over the past few months:
Looks like the value of the metric has been quite negative recently | Source: CryptoQuant
As shown in the chart above, Bitcoin exchange netflow recorded a deep negative surge over the past day. This outflow was approximately 7,000 BTC, leaving the platform’s wallet the largest value it has seen since the FTX crash in November last year.
From the chart, it can be seen that the fallout of FTX saw some large outflow values. The reason is that a well-known exchange like FTX will cause fear among investors and make them more aware of the risks of storing their coins on a centralized platform.
Naturally, the owners of this run the exchange in mass (causing the netflow to plunge into the red value) so that they can store Bitcoin in an offsite wallet, the key they have.
Interestingly, the latest negative netflow spike was recorded when Bitcoin has observed a sharp rally. Usually, inflows are more common at times like the present, as investors rush to take some of their profits.
Thus, instead of making these large outflows, investors show signs that they are bullish on Bitcoin in the long term and feel that the current rally has more to offer still.
This is only if the investor makes a withdrawal by collecting. In the scenario that they transfer out these coins to sell through over-the-counter (OTC) offers instead, Bitcoin instead can feel a bearish impulse.
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 images from Thought Catalog on Unsplash.com, charts from TradingView.com, CryptoQuant.com