Exchange Inflows Surge Amidst Bitcoin Volatility; Signaling Supply Outweighs Demand
Bitcoin has witnessed some intense volatility today that sent it reeling down to the sub-$9,000 region. The buying pressure at this level was significant and helped boost it back into its previous consolidation range in the mid-$9,000 region.
One interesting trend that came about concurrently with this decline was a massive inflow of Bitcoin into exchanges. This market a drastic shift from the multi-month exchange exodus that analysts have been closely watching.
This is a sign that investors viewed this latest decline as fundamentally significant, and it is a possibility that these fresh inflows could place some further pressure on the market.
One analyst is now noting that supply for the benchmark digital asset could far outweigh demand.
Whether or not this sentiment is valid will be determined by how it continues trading around its key support in the lower-$9,000 region.
Exchanges See a Massive Influx of Bitcoin as Weakness Grows
Overnight, Bitcoin posted a sharp decline that led it down into the sub-$9,000 region. From here buyers stepped up and absorbed the heavy selling pressure, stopping it from seeing any further downside.
After then hovering within the lower-$9,000 region for several hours, buyers then stepped up and sent the crypto rallying up towards its previous consolidation region around $9,400.
Despite not altering its market structure, this movement further highlighted the weakness that has been brought about by the consecutive rejections around $10,000 that it has posted in recent times.
It appears that investors are taking notice of this overt weakness, a trend that can be seen while looking towards BTC’s exchange inflows
Mason Jang, the CSO at analytics platform CryptoQuant, spoke about the massive surge in inflows that took place in the time directly surrounding this volatility.
He notes that whales on Coinbase and Gemini moved their holdings directly before the decline occurred.
“BTC crashed as the US stock has tumbled from 15 June, 02:00 UTC. Whales from Coinbase and Gemini moved before the dip…”
The chart seen below clearly illustrates this trend, showing just how significant these inflows were – given the short period of time in during which they took place.
Analyst: Inflow Trend Could Suggest Supply Outweighs Demand
While speaking about the aforementioned data, one analyst mused the possibility that this shows that the cryptocurrency is currently plagued by underlying weakness.
“Exchange inflows increased. Why am I not surprised… Price keeps breaking down then the question has to be asked, will miners really hold onto their inventory? Weakest participants probably wont. And if true then supply > demand,” he noted.
Exchange inflows increased
Why am I not surprised
Price keeps breaking down then the question has to be asked, will miners really hold onto their inventory?
Weakest participants probably wont
And if true then supply > demand
— TraderXO (@TraderX0X0) June 15, 2020
This trend could mark a shift in Bitcoin’s underlying strength, signaling that further downside is imminent.
Featured image from Shutterstock.