Bitcoin outflows have shown a spike amounting to 30k BTC today, leading to a plunge in the all exchanges reserve.
As pointed out by an analyst in a CryptoQuant post, the BTC exchange netflow showed a large negative spike earlier today.
The “outflow” is a measure of the total amount of Bitcoin exiting wallets of all exchanges. Similarly, the number of coins being deposited to exchanges is the “inflow.”
The difference between the inflow and the outflow is called the netflow. This indicator tells us the net amount of coins moving into or out of exchanges.
When the value of this indicator is negative, it means outflows are currently overwhelming the inflows and a net amount of Bitcoin is exiting exchanges. Such a trend, when prolonged, can be bullish for the price of the crypto as it may be a sign of accumulation.
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On the other hand, a positive netflow shows that a net amount of coins are entering exchange wallets at the moment. Since investors usually deposit to exchanges for selling purposes, this trend can be bearish for the coin.
Now, here is a chart that shows the trend in the Bitcoin netflow over the past couple of weeks:
Looks like the indicator showed a large downward spike recently | Source: CryptoQuant
As you can see in the above graph, the Bitcoin netflow had a huge negative spike earlier today. This amounted to an outflow of more than 30k BTC, or over $1.2 billion.
Such a large amount of coins exiting exchanges has made the exchange reserve (a metric that measures the total number of BTC present on exchanges) plunge down:
The indicator's value seems to have plummeted today | Source: CryptoQuant
If this outflow belongs to one or more whale entities withdrawing their Bitcoin for hodling in cold wallets, then it can be quite bullish for the price of the crypto as it has significantly reduced its sell supply (that is, the reserve).
However, as the quant notes, it’s yet unclear at the moment what this negative netflow may signify. It’s possible it could be just an internal transfer within the exchange wallets. And if so, it shouldn’t have any positive effect on the price.
At the time of writing, Bitcoin’s price floats around $40k, down 3% in the last seven days. Over the past month, the crypto has lost 6% in value.
The below chart shows the trend in the price of the coin over the last five days.
BTC's price plunged down yesterday | Source: BTCUSD on TradingView
Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com