On-chain data shows that the inflows of bitcoin exchanges for short-term holders have intensified recently as the asset rally has stalled.
Bitcoin holders in the short term are showing elevated trading flows
According to data from the on-chain analytics company glassRecently, short-term business owners made inflows equal to 1.28% of the total supply. The “exchange flow” here refers to an indicator that measures the total amount of bitcoin that investors are currently depositing on centralized exchanges.
Generally, investors deposit into these platforms for selling related purposes, so whenever the value of this metric is high, this is a potential sign of dumping occurring in the market. Naturally, this type of trend could have bearish consequences for the cryptocurrency price.
The exchange flow is usually defined for the entire market, but in the context of the present discussion the focus is only on the inflows made by the “Short Term Holders” (STHs).
STHs make up one of two major groups in the Bitcoin market (the other being “long-term holders”), and they include all investors who have been holding their coins for less than 155 days.
As their name already suggests, these investors tend not to hold out for very long, as they are usually the most volatile group in the market, selling easily at the sight of any FUD or profit-taking opportunities.
Now, below is a graph showing the trend in Bitcoin exchange flows specifically for STHs over the past year or so.
The value of the metric seems to have been quite high in recent days | Source: Glassnode on Twitter
Here, the exchange flow from STH is represented as a percentage of the supply (i.e. the sum of the wallet amounts held by each individual STH at the moment). From the chart, it is evident that the value of the index had risen to notable values earlier in the month when the market was going through FUD such as the SEC lawsuits against cryptocurrency exchanges Binance and Coinbase.
While it was clear that STHs were showing panic at the time, the volume of their sale was still much lower than other sell-offs that had occurred over the past year.
After the recent rise in the price of the cryptocurrency above the level of $30,000, the value of the index showed a sharp increase. Now, the metric has reached a value of 1.28%, which means that STHs have recently made inflows equal to 1.28% of their supply.
This level is higher than what was seen during the rebound rally in March this year. As can be seen from the chart, the rally at that time had hit the brakes when STHs increased their sales.
So far, Bitcoin has been trending sideways since the recent sharp price rally. So the current heavy selling of STHs is probably behind this trend, similar to what was in March.
BTC price
At the time of writing, Bitcoin was trading at around $30,100, up 4% in the past week.
BTC continues to hold above the $30,000 mark | Source: BTCUSD on TradingView
Featured image by Maxim Hopmann on Unsplash.com, charts from TradingView.com, Glassnode.com