On-chain data suggests that bitcoin whales may have engaged in a significant amount of buying as the market panicked over recent lows.
bitcoin Net Exchange Flow Has Been Quite Negative Recently
An analyst in a CryptoQuant Quicktake post noted that exchanges have recently experienced money outflows. The indicator of interest here is “net exchange flow,” which tracks the net amount of bitcoin flowing into or out of the wallets of all centralized exchanges. The metric value is calculated by subtracting the outputs from the inputs.
When the indicator has a positive value, inflows exceed outflows and a net amount of coins enter these platforms.
As one of the main reasons investors may want to deposit their btc on exchanges is for selling purposes, this trend may have bearish implications for the cryptocurrency.
On the other hand, the negative metric implies that withdrawals are occurring, which may be a sign that holders are accumulating at the moment. Naturally, this trend could prove bullish for the price of the asset.
Now, here is a chart showing the trend in bitcoin exchange net flow over the past year:
<img decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2023/12/Bitcoin-whales-bought-the-recent-dip-as-the-market-panicked.png" alt="bitcoin net exchange flow ” width=”1280″ height=”806″ loading=”lazy” data-recalc-dims=”1″/>
The value of the metric has been quite negative in recent days | Source: CryptoQuant
The chart above shows that bitcoin exchange net flow has seen some deep negative spikes recently. This suggests that there have been large capital outflows from these platforms.
Interestingly, these withdrawals occurred as btc fell towards the $41,600 level, implying that some investors were potentially buying while the rest of the market was panicking about the drop.
Given the large scale of the deposits, it is likely that whale entities were behind them. The fact that these huge holders were willing to risk accumulating at these recent prices could be a positive sign for the continuation of the rally.
Microstrategy also just announced its massive btc acquisition worth $615 million, which naturally may be another bullish sign for the coin. However, the net foreign exchange flows that occurred before the announcement are interesting.
It's hard to be sure if there is any connection between the two, but one possibility is that the whales who bought at these recent lows knew about the acquisitions beforehand.
Another explanation, and perhaps the most likely, is that these large investors were looking for an entry point into the asset ahead of potential ETF approvals, and the crash presented as good an opportunity as any to do so.
Whatever the case, it would seem that the moves made by the whales might have paid off so far, as the price of bitcoin has recovered from its lows (although its recovery hasn't been too strong yet).
btc Price
bitcoin had recovered as high as $43,800 over the past day, but the asset has since fallen again and is now floating around the $42,800 mark.
<img loading="lazy" decoding="async" class="alignnone size-medium aligncenter" src="https://www.tradingview.com/x/9pDqiIPH/" alt="bitcoin price chart” width=”1534″ height=”836″/>
btc has overall moved sideways during the last few days | Source: BTCUSD on TradingView
Featured image by Todd Cravens on Unsplash.com, TradingView.com charts, CryptoQuant.com
Disclaimer: The article is provided for educational purposes only. It does not represent NewsBTC's views on whether to buy, sell or hold investments, and investing naturally carries risks. It is recommended that you conduct your own research before making any investment decisions. Use the information provided on this website at your own risk.
