The near-term outlook for bitcoin has dimmed, analysts say, with some now seeing a possible extension of Monday’s major price drop.
“There could be another dump as outflows from the cryptocurrency exchange Coinbase Pro have dried alongside an increased transfer of coins onto exchanges,” David Lifchitz, chief investment officer for Paris-based quantitative trading firm ExoAlpha, told CoinDesk.
Bitcoin fell by over 20% on Monday to $30,305 amid heavy selling in the spot market.Bitcoin Coinbase outflows Source: CryptoQuant
Outflows from Coinbase Pro, which are considered synonymous with institutional purchases, have receded sharply from the three-year high of 55,000 BTC observed on Jan. 2.
The Grayscale Bitcoin Trust (GBTC), the biggest publicly traded crypto investment trust, hasn’t seen inflows since Christmas because it was temporarily closed, as noted by analyst Joseph Young. Grayscale is owned by Digital Currency Group, the parent company of CoinDesk.
That means demand-side pressures, which played a pivotal role in pushing bitcoin higher from $10,000 to $41,000 over the past three months, had weakened. The trust reopened Tuesday.
Meanwhile, exchange deposits have picked up the pace, a sign that some investors may be looking to liquidate holdings and take profits.Daily change in bitcoins held on exchanges Source: Chainalysis
The number of coins held on exchanges increased by over 57,000 BTC on Tuesday, the biggest-single day change since the markets crash on March 12, 2020, according to data from blockchain analytics firm Chainalysis.
Exchanges have registered an average inflow of 103,000 BTC per day in the past seven days – higher than the 180-day average of 83,700 BTC.
“At a minimum, increased inflows suggest that the type of buyers who self-custody, typically the larger investors, are not buying as much at the moment,” Chainalysis economist Philip Gradwell told CoinDesk. “These coins could be ...