Data van CryptoQuant show that bitcoin (BTC) on March 8 saw a large outflow from crypto exchanges. In total, about 10,000 BTC flowed from all crypto exchanges, which may be a sign that whales may be busy buying BTC.
The relevant indicator used is the ‘exchange net position change’. It measures the net amount of bitcoin going in or out of the wallets of centralized exchanges. A positive value of this indicator implies that investors have sent more BTC to the exchanges than they have withdrawn from it. If this BTC were to move towards spot exchanges, it is generally bearish for the bitcoin rate, as investors mostly use these platforms for selling purposes.
Conversely, a negative value means that more BTC has been removed from the exchanges. Such a trend is generally bullishas investors send their bitcoin to an external wallet to hold it for the long term.
What exactly does this mean?
It is unclear whether these recordings were a sign of new whale purchases. This is because the indicator uses both spot and derivative exchanges; the outflow of the latter does not necessarily imply accumulation. Spot exchanges, on the other hand, are used for the buy bitcoin.
An indicator that can provide hints about the source of this outflow is the ‘open interest’ which measures the total number of futures contracts currently open on derivatives exchanges. If the bitcoin outflows came from derivatives exchanges, open interest would have fallen as investors would have entered into a number of contracts to include the coins. However, open interest saw a slight increase on 8 March. Because of this, it is reasonable to assume that the withdrawals came from spot exchanges.
If the large outflow of March 8 was a sign that some whales are the largest crypto based on market capitalization, the price of BTC would be a bullish feel the effect.
At the time of writing, the bitcoin price is around $20,000: over the past day it is in the red by 7.5%.