Bitcoin Rushes To Exchanges, But This Sign Remains Positive For The Bulls

Keshav Verma

1 year ago

3 mins read

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On-chain data shows an increasing trend of Bitcoin moving to exchanges, a typical bearish sign, but another signal still remains optimistic for the bulls.

Bitcoin Exchange Inflows Are Up, But So Are USDT Deposits

According to data from the on-chain analytics firm Santiment, BTC has been flowing into exchanges recently. The relevant indicator here is the “supply on exchanges,” which keeps track of the percentage of a cryptocurrency’s total circulating supply that’s currently sitting in the wallets of all centralized exchanges.

When the value of this metric goes up, it means that the investors are making net deposits of the asset into these platforms, while a decline implies outflows are taking place.

What effect either of these trends might have on the market depends on the type of cryptocurrency in question. Santiment has shared the below chart, which shows how the supply on exchanges has recently changed for four assets: Bitcoin, Ethereum (ETH), Tether (USDT), and USD Coin (USDC).

The trends in the exchange supplies of the different top cryptocurrencies | Source: Santiment on X

As displayed in the above graph, the Bitcoin and Ethereum exchange supplies had both been on the decline earlier, but recently, BTC has diverged from this downtrend and registered some net deposits.

These deposits first started after BTC finished its rally to $44,000 and took to sideways movement. Generally, one of the main reasons why holders might deposit their coins to exchanges is for selling purposes, so these recent inflows can be a sign that selling has been taking place.

The uptrend in the supply on exchanges also became a bit sharper in the leadup to the asset’s latest plunge, suggesting that the inflows have indeed been adding to the selling pressure.

From the chart, it’s also visible that the Bitcoin supply on exchanges hasn’t yet reversed its trend, a potential indication that selling hasn’t completely exhausted yet.

Meanwhile, Ethereum has continued to see supply exit these central entities, implying that investors of the cryptocurrency are possibly still participating in net accumulation.

Something that could prove to be positive for BTC, though, is the fact that the Tether supply on exchanges has risen since the plunge. Investors usually make use of stablecoins like USDT and USDC whenever they want to escape the volatility associated with coins like BTC and ETH, but such investors generally only do this as a temporary measure.

When the holders plan to leave the cryptocurrency sector as a whole, they do so through fiat instead. Opting for stablecoins instead, thus, means that they intend to stay in the market and possibly eventually return back towards the volatile side.

Sizeable swaps from stables into Bitcoin and others can naturally provide a buying boost to their prices, so exchange inflows of them can be a bullish sign for these volatile assets.

The most bullish combination is when BTC rallies while the USDT exchange supply does the same, as such a trend suggests that fresh capital is entering into the sector.

In the current case, the Tether exchange supply has gone up at the expense of BTC’s price, so only a rotation of capital has occurred. Nonetheless, the fact that not all capital has exited the sector as a whole can still be an optimistic sign for the rally’s return.

BTC Price

Bitcoin had plunged towards $40,000 yesterday, but the coin has already made some swift recovery as it’s now trading around the $41,700 level.

Looks like BTC has made some recovery from its lows | Source: BTCUSD on TradingView

Featured image from Shutterstock.com, charts from TradingView.com, Santiment.net

Keshav Verma

Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.

Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.

In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.

Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.

Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..

Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.

Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.

As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.

Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.

Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.

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