According to blockchain data released on Monday, bitcoin inflows have spiked for the first time in three months at cryptocurrency exchanges, indicating investors are trying to liquidate their holdings in the downturn.
According to data provider Glassnode, crypto exchanges received a net inflow of 30,749.89 BTC on Monday. The bitcoin price fell by 40% on March 12, 2020, the day of bitcoin’s worst day since a panic-ridden coronavirus brought down the global stock market. The day became known as “Black Thursday.”
When investors want to liquidate their holdings, they usually transfer bitcoins to exchanges. Exchanges have seen a net inflow of over 40,000 BTC on Black Thursday, for example.
When the price of bitcoin fell to $42,102 on Monday, extending the previous week’s 20% decline and dropping to its lowest level since February 8, CoinDesk 20 data shows. In addition, Twitter users speculated that Tesla might be selling bitcoin holdings over the weekend, increasing the pace of the sell-off.
As per Glassnode, most net inflows on Monday were concentrated primarily on Binance, a preferred venue for retail investors. Coinbase, a U.S. exchange, reported bitcoin outflows, suggesting institutional investors are looking to take advantage of the price drop.
Glassnode wrote in its weekly newsletter that BTC had been largely outflowed since last week’s $20,000 all-time high. The trend has been expected to continue this week. Given the scale of withdrawals (10,001 to 20,000 per day) and Coinbase’s preferred status among U.S. institutions, it is the same as that larger buyers will remain actively accumulating during this consolidation.
In contrast to Binance, which received more than 80% of the total net inflow of 30,749.89 BTC on Monday, Coinbase net outflows totaled 146 BTC.
CEO Elon Musk
Moreover, Tesla CEO Elon Musk clarified Monday morning that no coins had been sold by the company. Musk’s declaration has not been able to lift Bitcoin’s price above $45,000 so far.
Recent weeks have seen diverging trends in net flows between the two exchanges. There has been a decrease of 34,408 BTC in Coinbase’s balance since April 19. Binance holders have increased their holdings by 95,397 during the last 4 weeks.
As noted by Glassnode, the bitcoin net flows have been rising sharply over the past few months, indicating increased volatility in Binance user sentiment.
In the latest Glass node newsletter, a new market entrant (panic sellers) appears to be driving the trend, as well as capital rotation away from BTC and towards other crypto assets, Glassnode reports. There is a possibility, or a chance, for instance, that some investors are dropping bitcoins into Binance to pick up alternative cryptocurrencies.
However, inflows do not necessarily indicate that coins have been liquidated immediately, just that traders are ready to sell, and it is difficult to determine how many coins have already been liquidated due to limitations in the data.
In spite of this, there’s also a chance that some of those traders might seek higher bitcoin prices.