Bitcoin Exchange Outflows Signal Investor Accumulation

The net outflow of Bitcoin from exchanges over the past month suggests that investors have started to accumulate the cryptocurrency, according to a CryptoQuant analyst.

March has been largely dominated by Bitcoin (BTC) outflows from crypto exchanges, aside from one spike in inflows just before the asset tapped a six-week high of $76,000 on March 17, according to CryptoQuant data. 

This negative net flow has remained present while Bitcoin “continues its liquidation phase,” the analyst known as Darkfost said on Wednesday.

“This persistent outflow suggests genuine accumulation by investors, who continue to buy and withdraw their BTC from exchange platforms,” he said.

Inflows to exchanges are generally bearish as investors prepare to exchange the asset for stablecoins, which adds to selling pressure, whereas outflows are often a sign of accumulation and a possible precursor to buying pressure.

Long-term accumulation rather than short-term speculation

The analyst added that the demand is not yet strong enough to restart a trend, “but it clearly indicates ongoing accumulation and is likely one of the factors behind the range formation that has been developing for several months now.”

Nick Ruck, director of LVRG Research, told Cointelegraph on Wednesday that the outflows signal “genuine long-term accumulation by investors rather than short-term speculation.”

The removal of Bitcoin from centralized platforms “showcases growing confidence in Bitcoin’s fundamentals amid current market conditions as holders indicate a lack of interest in selling to hedge against price volatility,” he added. 

Related: Rising US Treasury yields, war in Iran, rising inflation risk pressure Bitcoin price

Jeff Mei, the chief operations officer at crypto exchange BTSE, told Cointelegraph that crypto has outperformed stocks and gold since the beginning of the Iran war, “so it’s no surprise that investors are accumulating Bitcoin.”

“Crypto was oversold in the weeks and months prior to the conflict, so it makes sense that it hasn’t sold off as hard as stocks have,” he added. 

“This could also be an indication of Bitcoin emerging as a hedge against traditional stocks, as well as increased institutional ownership.” 

Bitcoin makes higher highs, higher lows 

Another indicator of potential trend formation is Bitcoin’s price making higher highs and higher lows, as it has done at least twice so far this month, according to TradingView.

In its weekly on-chain summary on Monday, Glassnode said that net unrealized profits and losses have improved slightly, “indicating a modest easing in unrealized losses across the market,” but cautioned that “sentiment is still under pressure despite tentative signs of stabilization.” 

Magazine: Banks want to run Vietnam’s crypto exchanges, Boyaa’s $70M BTC plan: Asia Express