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Bitcoin (BTC) Movements from and to Exchanges Remain Low

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Bitcoin (BTC) inflows and outflows to and from exchanges continue to decline, according to Glassnode. Data shows that despite the most recent price increase for Bitcoin and other virtual currencies, exchanges struggle to attract traders and investors. This could be related to Bitcoin’s bull market, which started in late 2021 and continues until today. 

Bitcoin Exchange Inflows and Outflows Shrink

Bitcoin exchange inflows and outflows have decreased in recent months and continue to fall, according to a recent report shared by Glassnode. This shows that the market has not yet recovered from the current bear market, despite the last few weeks that seemed quite positive for most virtual currencies. 

When the market experiences larger volatility, there tends to be a higher outflow and inflow of investors that move coins across exchanges and wallets. At the same time. It is also very common for users to withdraw funds from exchanges or to deposit more BTC in order to benefit from market movements. 

Glassnode shows that the peak was in the first half of 2021 when virtual currencies were reaching all-time highs. This was a period in which multiple users requested withdrawals, purchased non-fungible tokens (NFTs) or participated in different decentralized finance (DeFi) protocols. 

Things changed after the top in November 2021. At that time, volumes were already lower and inflow and outflows stabilized. But this was the moment in which a clear decline started, and it continues until today. This is likely to continue in the coming months if the market does not change direction or a new bull market starts as the one that started in 2021. 

Another thing to consider is related to how inflows and outflows work. When there is a larger inflow of BTC to exchanges than there are outflows, then the market tends to move lower. Why? Because this shows that users and investors are depositing funds on exchanges in order to sell them for fiat currencies. 

Now, if the tendency changes and there is a larger outflow of BTC than there are inflows, then we could see a steady price increase for BTC. As fewer BTC are available at exchanges, the price tends to move higher if demand remains stable. However, if demand falls even stronger, then the price will fall. 

These are very common moves that we have seen in the market over the past years. Glassnode shares very valuable information about how BTC flows work and how we can use them to benefit from current market changes. 

As mentioned before, the last weeks have been very positive for Bitcoin. Now BTC has stabilized above $17,000 when during most of December BTC was traded below that price level. Therefore, investors believe that there could be a new bullish moment for Bitcoin in the near future that could help digital currencies recover from the bear market that they experienced in the last year. 

At the time of writing this post, Bitcoin is being traded at close to $17,330 and it has a market capitalization of $333 billion per coin.

Jonathan Gibson

Jonathan Gibson

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