The primary cryptocurrency, Bitcoin (BTC), once again proves itself worthy of long-term investments to investors as more BTC gets transferred from exchanges to wallets. Ethereum, a contemporary and competing coin against BTC, happens to see an inverted situation on its end.
Outflow on exchanges is the number of coins moved from CEXs to DEXs, while inflow means the number of coins moved from DEXs to CEXs. Bears come to play when there is an increasing number of inflows, and that is because an influx indicates a decision to sell. On the flip side, bulls turn up in the event of rising outflow as it shows a willingness to hold for a very long period.
Exchange Net Position Change, a familiar on-chain metric used to calculate coins or tokens inflow and outflow, revealed that over the last few months, more Bitcoins (BTC) got transferred to wallets for holding than Ethereum (ETH). According to analysts, analyzing the situation of inflow and outflow gives off a good trading signal in determining market bias.
Bitcoin (BTC) Outflow Since Market Toppled
After the crash that led to all assets on the financial markets taking a freefall due to rapid sell-offs by large holders, the outflow of Bitcoin (BTC) has appreciated massively. Estimation shows the volume of efflux climbing up to $1 billion daily. Regardless of the coin declining to the extent of trading at $17,600 in June, investors continue increasing their holdings.
Investors keep showing interest in Bitcoin regardless of its current market price. They still deem the coin to be worth risking their money on. During the past week, the measure of Bitcoin outflow took a noticeable upturn despite the coin falling to trade below 20k.
Also, within the same week, FTX Exchange earned revenue of more than half the amount of Bitcoin outflow. Although, there has been no update regarding why it is so. On the 20th of August, a document dropped stating that FTX Exchange made more than 1000% of its net worth in 2020 by 2021. As a result rising from $90 million to $1 billion.
Scrutiny of FTX Exchange BTC holding revealed that the 120,000 Bitcoins they had in their reserve as of March had enormously reduced to 13,000 by the end of the second quarter, with even more leaving since the beginning of the third quarter. Some analysts believe this might have contributed to the drop in BTC price in June because the drop-off occurred around the time.
Ethereum (ETH) Cryptocurrency Inflow
The inflow of Ethereum to exchanges recently took flight, and some market participants attribute the situation to the impending Ethereum Merge from Proof-Of-Work to Proof-of-Stake. According to the ENPC, mid-march recorded a very high amount of Ethereum outflow as the market was still looking up. But afterward, the number of coins exiting different exchanges dropped to zero.
Investors consider the ETH situation a terrible market signal, especially with the merge inbound.
Bitcoin (BTC) outflowing more than Ethereum (ETH) suggests investors have more faith in BTC than ETH as a hedge, particularly in a time like this when the market is down.