On-Chain data shows that Bitcoin exchange inflows from short-term holders have increased recently as the asset’s recovery has stalled.
Bitcoin Short-Term Holders Report Increased Exchange Inflows
According to on-chain analysis firm Glassnode, short-term holders have recently seen inflows equivalent to 1.28% of their total supply. “Exchange inflow” in this context refers to an indicator that measures the total amount of Bitcoin investors are currently depositing into centralized exchanges.
In general, investors make their deposits on these platforms for selling purposes. So, when the value of this metric is high, it is a possible sign that dumping is taking place in the market. Of course, such a trend can have negative implications for the price of the cryptocurrency.
Typically, exchange inflow is defined for the entire market, but for the purposes of this discussion, the focus is solely on the inflows of short-term holders (STHs).
STHs form one of the two major cohorts in the Bitcoin market (the other being long-term holders) and encompass all investors who have held their coins for less than 155 days.
As the name suggests, these investors do not tend to hold for extended periods, as they are typically the most fickle individuals in the market, easily selling when FUD or profit-taking opportunities arise.
Below, you can see a chart depicting the trend of Bitcoin exchange inflows specifically for STHs over the past year or so.
The value of the metric appears to have been quite high in recent days | Source: Glassnode on Twitter
Here, exchange inflow for STHs is represented as a percentage of their supply (i.e., the sum of wallet amounts each individual STH is currently holding). From the chart, it is evident that the value of the indicator had surged to notable levels at the beginning of the month, as the market experienced FUD such as the SEC lawsuits against cryptocurrency exchanges Binance and Coinbase.
While STHs did exhibit significant panic during that time, the magnitude of their selling was still considerably lower than the sell-offs witnessed throughout last year.
Following the recent surge in cryptocurrency prices above the $30,000 mark, however, the value of the indicator has experienced a strong uptick. Now, the metric has reached a value of 1.28%, indicating that STHs have recently seen inflows equivalent to 1.28% of their supply.
This level is higher than what was observed during the recovery rally in March of this year. As can be seen from the chart, that rally stalled as STHs intensified their selling.
So far, Bitcoin has been trading sideways since the recent strong price surge. Therefore, it is possible that the current intensified selling from STHs is behind this trend, similar to what occurred in March.
BTC Price
At the time of writing this article, Bitcoin is trading around $30,100, representing a 4% increase in the past week.
Bitcoin continues to hold above the $30,000 mark | Source: BTCUSD on TradingView. Featured image from Maxim Hopman on Unsplash.com, Charts from TradingView.com, Glassnode.com.
