Bitcoin is starting to show signs of a potential uptrend as several on-chain metrics are turning positive. These metrics, which often serve as indicators of future price movements, paint a picture of growing optimism in the market. One of the key indicators supporting this positive outlook is the exchange’s inflow/outflow data, revealing a shift in sentiment towards Bitcoin.
Despite some notable large-scale Bitcoin transfers by the defunct exchange Mt. Gox and important movements by miners The total inflow of Bitcoin into crypto exchanges has declined sharply in recent days, despite the over-the-counter (OTC) counters.
Bitcoin Exchange Inflows See Sharp Drop
According to a recent report According to newsBTC, which analyzed data from Glassnode, Bitcoin’s sharp drop below $50,000 in early August was largely caused by an overreaction from short-term holders. This panic led to a significant influx of Bitcoin onto exchanges, increasing selling pressure and contributing to the price drop.
In support of this, data from CryptoQuant reveals that on August 5, BTC inflows to exchanges increased dramatically to 94,000 BTC. The trend continued with 49,000 BTC on August 6 and another 51,370 BTC on August 7, further strengthening the selling momentum.
Interestingly, flows into exchanges have slowed significantly since then, indicating that the initial sell-off may be losing steam. CryptoQuant’s August 22 data shows a clear decline, with only 32,338 BTC entering exchanges compared to 32,723 BTC being withdrawn, indicating a shift in market sentiment.
This shift is further confirmed by: data from IntoTheBlock reports that total Bitcoin netflow across aggregated exchanges has turned negative, with a net outflow of 3,560 BTC over the past 24 hours and a negative 2,000 BTC over the past seven days. While the difference between outflows and inflows is relatively small, it represents the first significant change in buying and selling dynamics since early August.
What is the future of BTC?
Historically, when more Bitcoin is withdrawn from exchanges than is deposited, it means that investors are choosing to hold their assets rather than sell. This is usually a positive sign.
At the time of writing, Bitcoin is trading at $61,000 and is up 4.5% in seven days. Other on-chain metrics offer a cautiously optimistic outlook for BTC, pointing to the possibility of positive price action to come. One such metric is IntoTheBlock’s “Bid-Ask Volume,” which is currently showing a 3.93% shift to the bid side.
This shift indicates a higher volume of buy orders compared to sell orders, which shows that there are more buyers than sellers in the market. The increase in buying behavior suggests that a growing number of investors are expecting a rise in the price of Bitcoin.
The futures market derivatives momentum has also turned positive at 0.75. This is a particularly bullish signal, especially considering that the Bitcoin price is now in a in the short term.
Main image created with Dall.E, chart from Tradingview.com