After days of intense bearish action, Bitcoin price appears to be entering a calmer state as it rebounds above the $86,000 level. The latest on-chain data shows that several investors tried to make some profits over the past week, setting the stage for the leading cryptocurrency to register a double-digit loss.
Bitcoin exchange inflows increase as the price is under downward pressure
In a recent post on social media platform X, crypto analyst Ali Martinez says revealed that significant amounts of Bitcoin have been sent to centralized exchanges in the past week. Santiment data shows that approximately $20,000 BTC (worth almost $2 billion) has been moved to these exchanges in the last seven days.
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The relevant indicator in this on-chain observation is the Exchange Inflow metric, which tracks the volume of an asset (in this case Bitcoin) flowing to centralized exchanges within a given period. This metric is often important because selling is one of the exchanges’ most important service offerings.
Thus, an increase in the Exchange Inflow metric suggests that investors may offload an asset. The resulting increased supply of this cryptocurrency on the open market often puts downward pressure on the coin’s price, especially if there is no corresponding increase in demand.
In a separate post on shared a data piece that supports the recent spike in currency inflows. According to data highlighted by the crypto researcher, Bitcoin inflows amounted to approximately 81,000 BTC on Friday, November 21 (the highest level since mid-July).
Ultimately, this recent spike in currency inflows explains the volatility that Bitcoin’s price experienced on Friday. The flagship cryptocurrency succumbed to significant bearish pressure and saw its price fall to just above $80,000 as the weekend approached.
At the time of writing, the price of BTC stands at around $86,070, reflecting an increase of more than 2% in the past 24 hours.
Bitcoin in profit-taking phase: CEO of CryptoQuant
CryptoQuant CEO Ki Young Ju revealed that Bitcoin is in a profit-taking phase, as evidenced by rising currency inflows. The cryptocurrency founder made this claim based on the PnL Index Signal, which measures profit and loss levels based on the fees of all wallets.
With the current reading of the PnL Index signal, Ju proclaimed that classical cycle theory says BTC is entering a bear market. According to the CEO of CryptoQuant, only macro liquidity can negate the profit-taking cycle just like it did in 2020.
Therefore, all eyes will be on the December meeting of the Federal Open Market Committee (FOMC), especially given declining expectations of a rate cut by the US Federal Reserve (Fed).
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Featured image from iStock, chart from TradingView