The recent on-chain data analysis shows that exchange inflows across the cryptocurrency market have been low. Here is what this trend might mean.
Exchange Inflows for Major Crypto Assets Are Currently Subdued
According to Glassnode, a provider of on-chain data analytics, exchange inflows for major crypto assets are currently near cyclical lows. The exchange inflow metric measures the total amount of a given cryptocurrency that is being transferred to the wallets of centralized exchanges.
When the value of this metric is high, it indicates that investors are depositing coins to these platforms, preferably for selling-related purposes. In this sense, such a trend can have bearish implications of the crypto’s price. Conversely, low values of the indicator imply that exchanges are not receiving many coins at the moment. Depending on other factors, such a trend can either be neutral or bullish for the value of the asset.
From the chart below, it is clear that exchange inflows for major crypto assets have declined recently and hit some relatively low values. This fact would imply that not many investors are currently depositing their coins to these platforms.
Looks like the value of the metric has declined in recent weeks | Source: Glassnode on Twitter
Typically, the indicator has high values during periods of heavy selling pressure in the market as seen in May 2021 when a massive selloff took place. The period marked the largest value of $12.2 billion for this metric. Similarly, other major selloffs including the LUNA crash in May 2022, the 3AC bankruptcy in June 2022, and the FTX collapse in November 2022 also recorded notable spikes in the indicator. Also, large inflows across the market were seen around the time of the selloff in March 2020 when the Bitcoin price had crashed below the $20,000 level.
Currently, the major crypto assets are only observing total exchange inflows of $1.84 billion, which is very low compared to any of the aforementioned spikes. The low levels right now suggest that there isn’t much appetite for selling across the crypto market. This indicates that the tokens might build upwards momentum. However, the fact that the current levels are near the cyclical lows suggests there is a general lack of investor participation in the sector. Typically, low participation is associated with sideways-moving markets, which is what Bitcoin and others are experiencing at the moment.
BTC Price
At the time of writing, Bitcoin is trading around $26,700, down by 4% in the last week.
BTC has gone down recently | Source: BTCUSD on TradingView
Featured image from Kanchanara on Unsplash.com, charts from TradingView.com, Glassnode.com
