Bitcoin outflows show big increase, whales on shopping spree?

On-chain data shows that exchanges have seen a huge Bitcoin outflow lately, a sign that whales may be buying into the asset.

Online flows for Bitcoin Exchange have been negative for the past few days

An analyst in a CryptoQuant post pointed out that around 10,000 BTC flowed out of the exchanges yesterday. The relevant indicator here is “all exchanges online flow”, which measures the net amount of Bitcoin entering or exiting the wallets of all centralized exchanges. The metric’s value is calculated by dividing inflows and outflows.

When the indicator registers a positive value, inflows are more significant than outflows, and a net amount of BTC moves into exchanges. If these deposits are heading to spot exchanges, BTC may feel a bearish effect as investors usually use these platforms for selling purposes.

On the other hand, the net flow with a negative value suggests that the holders are withdrawing a net number of coins right now. Such a trend could be a sign that investors are currently accumulating the cryptocurrency and are positive about the asset’s value.

Now, here’s a chart showing the trend in Bitcoin all-exchange online flow over the past couple of months:

Looks like the value of the metric has been quite negative during the past day or so | Source: CryptoQuant

The graph above shows that Bitcoin exchange netflow registered a huge negative peak yesterday. Investors have withdrawn a net amount of 10,000 BTC corresponding to this peak.

However, whether these withdrawals were a sign of any fresh purchases from the whales is unclear. That’s because investors use spot exchanges for purchase-related activities. Nevertheless, the online flow indicator used here includes data for both spot and derivatives exchanges; outflows from the latter will not necessarily involve accumulation.

One metric that may hint at the source of these outflows is the “open interest,” which measures the total amount of futures contracts currently open on derivatives exchanges. The chart below shows how the Bitcoin open rate value has changed recently.

The value of the metric seems to have been mostly flat in recent days | Source: CryptoQuant

The graph shows that the Bitcoin open rate did not register any decline in the last 24 hours, while all exchanges’ net flow observed a huge negative peak at the same time. Rather, open interest rose slightly during this period.

If the outflows from yesterday came from derivatives exchanges, the open interest would have decreased as investors would have closed some contracts to extract the coins. Since that has not been the case, it seems reasonable to assume that the withdrawals were from spot platforms.

If the large negative online stream surge was a sign of some whales buying up the cryptocurrency, the price of BTC could feel a bullish effect.

BTC price

At the time of writing, Bitcoin is trading around $21,000, down 10% in the last week.

BTC has plunged during the last 24 hours | Source: BTCUSD on TradingView

Featured image from Todd Cravens at Unsplash.com, Charts from TradingView.com, CryptoQuant.com