As many people await a potential Bitcoin market reversal, all metrics will have to align perfectly. That is much easier said than done, given the current market circumstances. For Bitcoin, the situation may finally show signs of minor improvements – thanks to fewer addresses sending to exchanges – although there is a long way to go.
Fewer Addresses Sending to Exchanges
One way of tackling the current market volatility is by reducing the available liquidity found across trading platforms. Whether it is a centralized or decentralized exchange, having less liquidity will often help stabilize prices or even push them higher. For Bitcoin, there is always sufficient liquidity, although slowly eroding it can prove beneficial.
Until recently, it appeared as if Bitcoin would face a supply shortage of some sort. More BTC was being withdrawn from exchanges than people would deposit, creating a negative netflow. That is not necessarily the case these days, although it appears things are improving. Per Viewbase, the daily netflow is negative 2887 BTC. With 7.3% of the supply on exchanges, this metric is heading in the right direction again.
Contributing to this “positive” development is the decrease in addresses sending to exchanges. It may seem straightforward for this metric to reverse course, as there are only so many BTC to spend. However, hitting a five-month low in addresses sending to exchanges is beneficial to the overall netflow. It also confirms fewer people are willing to sell at this [lower] price.
Continuing this downtrend may prove essential to achieving a stable Bitcoin price floor again. After dipping below $35,000, there are still many concerns regarding Bitcoin hitting $28,000 or even lower prices in the future. All of that is still possible shortly, although it will heavily depend on how much liquidity there is to be found across exchanges and trading platforms.
Bitcoin Miner Outflow Dips
While it is good to see individual community members contribute fewer funds to exchanges, there is more to look at. The miners, for example, can exert significant price pressure by dumping their block rewards on exchanges as quickly as possible. Thankfully, it appears that this aspect is slowly losing momentum.
Per Glassnode, there is a significant decline in overall miner outflow as of late. A new six-month low has been recorded this week, which is the lowest value since mid-December 2020. A decrease in overall addresses sending to exchanges and a lower miner outflow are two compelling cases to expect a Bitcoin price reversal of some sort.
For now, it is a matter of waiting and seeing how the markets will evolve over the coming days and weeks. Nothing has been set in stone at this time, even if some of the key metrics show signs of improvement. There is still a long way to go until Bitcoin returns to $60,000 per BTC and more, however. If and when that will happen will remain debatable, as this industry will always be volatile.