Bitcoin Plummets To $59,000, On-Chain Data Reveals Why
August 28 2024 - 4:30PM
NEWSBTC
Bitcoin has observed a plunge to the $59,000 level during the past
day. Here’s what could be behind it, according to on-chain data.
Bitcoin Exchange Inflow Spiked Just Before The Crash In a new post
on X, CryptoQuant Head of Research Julio Moreno discussed the
latest trend in Bitcoin Exchange Inflow. Exchange
Inflow is an on-chain metric that tracks the total amount of
assets being transferred into the wallets of centralized
exchanges. Investors deposit many coins on these platforms when
this indicator’s value is high. One of the main reasons holders may
transfer to exchanges is for selling-related purposes so this trend
can have bearish consequences for BTC’s value. Related Reading:
Litecoin Sees Sudden Exodus Of Retail Investors: Why This Can Be
Bullish On the other hand, the low metric implies holders aren’t
moving that many coins from self-custody into exchanges, which,
depending on whether outflows are also occurring, can potentially
be bullish for the cryptocurrency. Now, here is the chart shared by
Moreno that shows the trend in the Bitcoin Exchange Inflow over the
past few days: As displayed in the graph at the top, the Bitcoin
Exchange Inflow saw some notable spikes in the lead-up to the
latest price plunge. The version of the indicator in the chart is
specifically for the spot platforms, so selling was likely the goal
of the investors making these deposits. The CryptoQuant head has
also attached the data for another metric: the Spent Output Value
Bands version of the Exchange Inflow, under the chart for the
Exchange Inflow. This indicator shows how the Exchange Inflow
breaks down according to the transactions’ size. In the graph,
Moreno has specifically highlighted the 1,000 to 10,000 BTC value
band, corresponding to addresses carrying between 1,000 and 10,000
tokens in their balance. Investors of this scale are popularly
known as the whales and are considered among the market’s most
influential entities. As the chart shows, the Exchange Inflow for
these large Bitcoin holders also spiked alongside the spikes in the
general metric, implying that the whales contributed to some of the
deposits. Related Reading: Solana, Ethereum Attract Traders Amid
Bitcoin Open Interest Plunge Given the timing of the inflows made
by these humongous investors, it’s probable that this selling was
partially responsible for the bearish price action the
cryptocurrency witnessed during the past day. As such, the
indicator could be worth monitoring shortly, as more large deposits
could suggest that the Bitcoin sellers aren’t done yet. BTC Price
At the time of writing, Bitcoin is floating around $59,900, down
almost 4% over the last 24 hours. Featured image from Dall-E,
CryptoQuant.com, chart from TradingView.com
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