Inflows to bitcoin exchanges hit their highest level in six months, on-chain data showed, suggesting profit-taking could follow the price surge.
Bitcoin exchange inflows have soared to six-month highs
According to the data of the analysis company on the chain mood, a large number of currencies have recently entered the exchange. The relevant metric here is the “exchange flow balance,” which measures the net amount of Bitcoin flowing into or out of all centralized exchange wallets.
When the value of this indicator is positive, it means that the inflow of funds in the market is currently exceeding the outflow of funds, and there is a net amount of tokens entering the exchange wallet.
Since one of the main reasons a holder might deposit on an exchange is for sale-related purposes, this value could have a bearish impact on the price.
On the other hand, a value of this indicator that is less than zero indicates that supply is being withdrawn from exchanges. This trend, if sustained, could indicate that investors are currently accumulating assets, and thus could be bullish on the BTC price.
Now, here is a chart showing the trend of the Bitcoin transaction flow balance over the past month:
It looks like the value of the indicator has been quite positive in recent days | Source: Santiment on Twitter
As the chart above shows, the Bitcoin transaction flow balance has surged above the zero line over the past few days. During this peak period, a total of approximately 21,524 BTC ($524.9 million at current exchange rates) was deposited into these platforms.
This net inflow is the highest observed since last September, about six months ago. These massive deposits come after the crypto’s price has seen a strong uptrend and breached the $24,000 level.
The chart also shows data for another metric, “Exchange Supply,” which tells us the percentage of the total Bitcoin circulating supply currently stored in exchange wallets.
Of course, as the money inflows happened, the indicator also spiked. According to the metric, roughly 0.11% of the BTC supply was transferred to exchanges where these deposits were made in just one day.
As investors moved these funds to exchanges amid the price surge, it is reasonable to assume that at least some of these deposits were made to take advantage of the current profit-taking opportunity.
So far, prices have continued to rise to higher levels despite these inflows, suggesting that the market may have been more than happy to absorb this selling pressure. However, if profit-taking continues, the price could face some downside in the near term.
bitcoin price
At the time of writing, Bitcoin is trading at around $25,900, up 16% in the last week.
BTC has surged over the past two days | Source: BTCUSD on TradingView
Featured Image via Thought Catalog on Unsplash.com, Charts via TradingView.com, Santiment.net
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