On-chain data suggests that Bitcoin whales may be catching the dip, as spot exchanges recently experienced their largest drawdown of 2024.
Bitcoin Exchange Netflow Has Recently Turned Deep Red
As pointed out by an analyst in a CryptoQuant Quicktake aftera large number of coins have recently left the spot exchanges. The indicator of relevance here is the “exchange grid current,” which tracks the net amount of Bitcoin moving in and out of the wallets of all centralized exchanges.
When the value of this metric is negative, it means that outflows are currently exceeding inflows and that a net amount is leaving the wallets of these platforms. This kind of trend could indicate that investors want to hold for the long term, which of course could be bullish for BTC.
On the other hand, if the indicator is positive, it suggests that holders are making net deposits to exchanges. The exact implication of such a trend on the cryptocurrency depends on what type of exchange is receiving these deposits, spot or derivatives.
In the case of spot exchanges, inflows can be bearish on the price, because they suggest that investors may want to sell. Derivative inflows are not so simple, but they do lead to higher variability for the asset, as they imply that traders want to open riskier positions in the market.
Below is a chart showing the trend in net flow from Bitcoin exchanges, specifically 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 shown in the chart, the Bitcoin exchange net flow for spot exchanges has seen a huge negative spike during the latest price drop, possibly suggesting that some big investors accumulate.
In total, this spike in net outflows has resulted in 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 outflow, it is possible that whales are betting on the price to rise from these recent lows while keeping their coins in their own hands.
It’s not just the spot platforms that are seeing this trend, as another quantity has pointed out that net inflows to derivatives exchanges have also seen large negative peaks.
The value of the metric appears to have been quite negative in recent days | Source: CryptoQuant
This net outflow from derivatives platforms could suggest that the whales are looking to reduce their risk. However, since these coins have not gone to spot exchanges, these derivatives users may be planning to hold on to them for a longer period of time, following the lead of the spot whales.
BTC price
At the time of writing, Bitcoin price is trading at around $57,200, down almost 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
Main image from Dall-E, CryptoQuant.com, chart from TradingView.com