According to on-chain data, Bitcoin netflows have become progressively negative since the fall, implying that investors have been buying the dip.
According to an analyst in a CryptoQuant post, BTC netflows have begun to turn negative since the crash a few days ago.
The “all exchanges netflow” is a metric that quantifies the net amount of Bitcoin that enters or exits the wallets of all exchanges. The metric’s value is determined as the difference between inflows and outflows.
When the indicator’s value is positive, it signifies that there are now more inflows than outflows. Such levels indicate that investors are sending a net amount of coins to exchanges, presumably for sale.
As a result, positive netflow numbers might be bearish for Bitcoin prices because they boost the coin’s selling supply.
On the other side, positive readings indicate that a net sum of coins is being withdrawn from exchanges. This trend can be beneficial for cryptocurrency because holders typically shift their BTC out of exchanges for hodling.
Here’s a graph that displays the trend of Bitcoin netflows over the last six months:
As shown in the graph above, the Bitcoin netflow has turned progressively negative in recent weeks as the cryptocurrency’s price has plummeted. This demonstrates that speculators have been buying the “dip” by transferring a net sum of coins out of exchanges.
As previously stated, the supply on exchanges is frequently seen as the “selling supply” of BTC. As a result, the trend of decreasing during the last few weeks may be bullish for the price in the long run.
At the time of writing, the price of Bitcoin is hovering around $36.5k, down 13% in the last seven days. The value of the cryptocurrency has dropped by 28% in the last month.
The chart below depicts the price trend of BTC over the previous five days.
Bitcoin’s price fell as low as $33k yesterday before rising above the $36k mark today. At present, it’s unclear whether the coin has bottomed or if further declines are on the way.
However, if netflows are any indication, the medium to long-term picture may remain favorable.
