Bitcoin exchange inflows drop to multi-year lows
Currency flow metrics are used to assess investor sentiment and behavior. Inflows to exchanges usually denote token holders withdrawing profits. While outflows usually relate to holders moving tokens from exchanges for long-term storage.
Both inflows and outflows have slowed significantly from the November 2021 market highs, with inflows seeing the biggest change by dropping to multi-year lows.
Bitcoin Exchange Inflow and Outflow
Currency inflow and outflow shows the total amount of Bitcoin transferred to and from exchange wallets in USD. The chart below shows that over a 30-day moving average, inflows have consistently exceeded outflows since mid-2017. This is expected behavior in a bull cycle as smart money holders send BTC to exchanges to take profits.
Since the market peak in November 2020, this difference has been particularly noticeable, with inflows significantly higher than outflows, culminating in a peak in June 2021 of approximately $6 billion.
Since that peak, however, inflows have fallen markedly, corresponding to the covid crash levels seen in July 2020.
Exchange Inflow Heatmap
Heatmaps show an overview of the total transfer volume sent to and withdrawn from exchanges in USD.
The left y-axis represents the size of individual transaction volumes in USD. The color represents the number of transactions in each of the 100 volume buckets. At the same time, the right y-axis shows the Bitcoin price in USD on a logarithmic scale. Along the bottom x-axis is time.
The chart below shows high inflow volume that occurred during the previous peak of the bull cycle in December 2017. Similarly, this pattern played out during Bitcoin’s double peak, when the price reached $64,000 and $69,000 in March 2021 and November 2021, respectively.
Exchange Outflow Heatmap
Token outflows follow a similar pattern to inflows, with peak transaction numbers in December 2017, March 2021 and November 2021.
Taken in the context of previous observations, this suggests that short-term holders bought Bitcoin heavily during both bull cycle peaks while long-term holders sold at the peak.
