Bitcoin has experienced a significant pullback to the $58,000 level over the past day. On-chain data offers potential explanations for this dip.
Recent data from the market intelligence platform IntoTheBlock reveals that centralized exchanges have recently seen an outflow of Tether (USDT) that exceeds $1 billion. Typically, when investors anticipate trading their coins soon, they store them on exchanges. Thus, the withdrawal of tokens might indicate their interest in holding them long-term.
Bitcoin, being a volatile asset, usually sees bullish trends when exchange outflows occur. However, in this instance, it’s stablecoins like Tether that are being withdrawn, which impacts the market differently. Investors often use fiat-tied tokens like Tether to avoid the volatility associated with cryptocurrencies like Bitcoin. Eventually, they plan to reinvest into the market and use exchanges for this purpose. When stablecoins flow into exchanges, it generally signals an impending bullish market phase. Conversely, when stablecoins are withdrawn into self-custody, it can indicate a bearish trend as it shows that investors are not planning to reinvest into volatile assets shortly.
The recent surge in Tether withdrawals could be the reason behind Bitcoin’s recent price decline. This move hints at possible Bitcoin selling, as many investors prefer to transfer their assets into self-custody after exchanges. This trend was echoed in previous large USDT outflows, which also led to bearish outcomes for Bitcoin.
Additionally, the cryptocurrency derivatives market has witnessed substantial liquidations due to recent volatility in Bitcoin and other digital assets. Data from CoinGlass reports approximately $146 million in cryptocurrency liquidations in the last 24 hours, with $120 million arising from long contracts, constituting over 80% of the total. Interestingly, Ethereum (ETH) has led these liquidations, contributing slightly more than Bitcoin.
At this moment, Bitcoin is trading around $58,800, reflecting a 4% decrease over the last 24 hours. Recent price movements suggest a sideways trend for the cryptocurrency in recent days.
