Bitcoin on-chain data shows that the outflow of BTC has been slowly going down recently, indicating that a crash may come soon.
On-chain data shows that BTC outflows continue to decline
As directed by an analyst Twitter, On-chain data reveals that the flow of bitcoin has been steadily declining over the past month.
The relevant metric here is BTC Netflow. This indicator shows the net amount of currency that comes out or enters the exchange wallet. Its value is calculated with the difference between flow and flow.
When the netflow shows a negative value, it means that the outflow is affecting the flow. This means that bitcoins are being exchanged for more than the amount being kept
On the other hand, positive values indicate that currencies are entering the exchange because the flow shows more energy than the outflow. This could be bearish for the price of BTC.
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Now, here is a chart that shows the price trend of BTC Netflow over the year:
BTC's outflows seem to be decreasing | Source: Glassnode
As the graph above shows, Bitcoin has seen significant outflows over the past few months, but recently they have started to slow down.
Looks like the 2021 bull race saw an outburst at the time. Once the netflow starts to turn green (i.e. investors start exchanging their coins for sale), the price crashes.
If the outflows continue as they are now, the indicator may turn green again. This could soon be another price crash.
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However, it should be noted that the netflow became similarly neutral at many points during the last bull run, but no major corrections were made. So it remains to be seen whether this time the indicator will be positive.
At the time of writing, the price of BTC is around $ 62k, up 9% in the last seven days. Last month, the crypto price gained 31%.
The following chart shows the trend of Bitcoin prices over the last five days:
BTC's price shows a rather sideways movement over the last few days | Source: BTCUSD on TradingView
After a crash-ridden September, Bitcoin has taken some big steps this October as crypto is now very close to creating a new all-time high (ATH). It’s not clear where the currency could go, but if the netflow starts to turn positive, a crash could come soon.
Featured image from Unsplash.com, charts from TradingView.com, Glassnode.com