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The data show that bitcoin exchange entries and exits have reached a dead end because the networks are not tilting in a particular direction.
Demand for Bitcoin Perhaps slowing as Netflows become neutral.
According to the latest weekly report from Glassnode, only around $20 million in net outflows are taking place in the BTC market right now. Here we have three relevant indicators: the inflow of foreign exchange, the inflow of capital and the flow of capital.
The exchange influx measures the total amount of Bitcoin being deposited in centralized exchanges, while the outgoing stream keeps track of the opposite: the number of coins leaving exchanges.
The “exchange netflow” is simply calculated by taking the difference between the inflows and the outflows. Of course, the importance of the value of the measure is that it is the net amount of BTC entering or leaving trading portfolios.
Where the value of this measure is positive, this means that capital inflows exceed capital outflows at the present time. As one of the primary reasons investors deposit on stock exchanges is for sale purposes, this kind of trend can have downward consequences on price.
Negative values, however, imply that outward flows are more dominant on the market at the moment. Extended net exits can be upward relative to price as they may indicate that investors are building up.
Now here is a chart that shows the trend in the monthly Bitcoin netflow exchange over the past several months:
The value of the metric seems to have been near the zero mark recently | Source: Glassnode's The Week Onchain - Week 5, 2023As displayed in the above graph, the Bitcoin monthly exchange netflow was at deep negative values during the November-December period following the collapse of the crypto exchange FTX.
The greatest releases in the history of cryptography occurred in that period, as a net amount of btc was removed at the rate of $200,000 coins per month at that time. One of the contributing factors behind these large outflows was that many investors were taking their coins off centralized platforms out of fear because of what went down with a known exchange like FTX.
Recently, however, the netflow has retreaded to almost neutral values, suggesting that the inflows are balancing out the outflows now. This means that as the price of the crypto has rallied, the buying demand in the market (which the outflows kind of represent) has dropped off relative to the fresh selling (the inflows) that’s taking place now.
The graph below shows the data for the input and output volumes of bitcoin separately in recent years.
Looks like both the metrics are at even values now | Source: Glassnode's The Week Onchain - Week 5, 2023According to the graph, it is obvious that in pure figures, these two volumes have increased in this rally.
They almost perfectly balance each other (which the net has already revealed) as a meager $20 million outflows are taking place right now.
BTC has declined over the past day | Source: BTCUSD on TradingView
