Despite the recent downtrend, Bitcoin’s net flows remain largely negative

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The data shows that despite the recent downward trend in the price of Bitcoin, net foreign exchange flows have remained largely negative.

Bitcoin exchange exits dominate entries

According to Glassnode’s latest weekly report, Bitcoin’s net flows have been mostly negative over the past two months, although the price has tended to decline over the period.

The “netflow of all trades” is a chain indicator that measures the net amount of coins entering or leaving trades, and the direction of that movement.

The value of the metric is calculated by making the difference between the inputs and the outputs. If the net flow has positive values, it means that inputs are currently dominating outputs as investors deposit a net amount of coins to trade wallets.

Investors usually send their coins to exchanges to withdraw them in fiat or to buy altcoins. Therefore, such a trend, if maintained for a while, may be bearish for the price of the coin.

On the other hand, if the indicator has negative values, it implies that the outputs exceed the inputs at the moment. Over time, this trend can mean that holders are accumulating BTC because they are withdrawing a net amount of coins. Naturally, this can turn out to be bullish for crypto.

Related reading | Beginning of December Bloodbath increases the volume of Bitcoin exchanges

Now here is a chart that shows the trend of net BTC flows over the past year:

Looks like the indicator recently posted negative values ​​| Source: Onchain of the week Glassnode (week 50)

As the chart above shows, BTC net flows have been largely negative recently. They turned positive before the crash of December 4, but have since turned negative.

Related reading | MicroStrategy Increases Bitcoin Holdings with $ 82 Million Purchase

This is quite different from the May crash, where the indicator had very positive values ​​for a while as the entries dominated the exits.

This shows that although the market sold off in the December 4th crash, demand for Bitcoin has always been quite strong, as the very negative net flows suggest.

BTC price

As of this writing, the price of Bitcoin is floating around $ 47.7,000, down 7% over the past seven days. Over the past thirty days, the crypto has lost 26% in value.

The chart below shows the coin’s price trend over the past five days.

BTC price appears to have plunged again | Source: BTCUSD on TradingView

Over the past few days, Bitcoin has mostly consolidated in the $ 45,000- $ 50,000 range. At this time, it’s unclear when the coin might exit this lateral movement, or in which direction it might escape. However, if net flows are something to watch, the coin’s price may be bullish in the long term.

Featured image from Unsplash.com, charts from TradingView.com, Glassnode.com

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