Bitcoin has experienced a sharp decline to the $59,000 mark over the past day, and recent on-chain data offers potential insights into the cause. According to a recent post by CryptoQuant’s Head of Research, Julio Moreno, there has been a notable spike in Bitcoin Exchange Inflow, a metric that tracks the amount of Bitcoin being transferred into the wallets of centralized exchanges.
High values of this metric typically indicate that investors are depositing large quantities of Bitcoin onto exchanges, which often foreshadows selling activity. This influx of deposits can lead to bearish consequences for the cryptocurrency’s value.
Conversely, when the metric is low, it suggests that fewer coins are being moved from self-custody to exchanges. This situation can be bullish for Bitcoin, especially if there are also significant outflows from exchanges.
Moreno shared a chart illustrating the Bitcoin Exchange Inflow over the past few days, highlighting significant spikes just before the recent price drop. The spikes were particularly notable on spot trading platforms, indicating that selling was likely the primary motivation behind the deposits.
Additionally, Moreno provided data for another indicator: the Spent Output Value Bands version of the Exchange Inflow. This version breaks down the Exchange Inflow based on transaction size. The focus here was on transactions involving between 1,000 to 10,000 BTC, reflecting the activity of large holders, commonly referred to as whales.
The chart indicated that these whales had also made substantial deposits, suggesting their involvement in the recent selling activity. Given the timing of these large inflows, it’s probable that the selling by these influential investors was a significant factor in Bitcoin’s price decline.
The current state of Bitcoin, trading at around $59,900 and down nearly 4% in the last 24 hours, underscores the impact of these movements. Moving forward, keeping an eye on the Exchange Inflow metric could provide further clues about whether the market’s selling pressure has subsided or if more turbulence is on the horizon.
