Over the past week, Bitcoin has consistently tested resistance in the $40,000 range, which is a major drag on the coin’s price in the short term. After repeatedly failing this level, the weekend was marked by a Bitcoin rally that hit all other cryptocurrencies.
Unsurprisingly, bitcoin’s recovery generated a ripple effect that caused most of the cryptocurrency market to recover. Consequently, this produced a second general effect: a massive outflow of circulating funds in several markets.
Glassnode Alerts, a Twitter profile focused on displaying cryptocurrency data, noted a surge in daily money outflows from exchanges, with $61.4 million being withdrawn in Bitcoin and $162 million in Ethereum.
📊 Daily on-chain exchange flow#Bitcoin $BTC
➡️ $637.3 million in
⬅️ $698.6M off
📉 Net Power: – $61.4 Million#Ethereum $ETH
➡️ $621.9M in
⬅️ $784.3M off
📉 Net Flow: – $162.4 Million#Tether (ERC20) $USDT
➡️ $691.3 million in
⬅️ $337.6 million off
📈 Net Power: +$353.7Mhttps://t.co/dk2HbGwhVw— glassnode alerts (@glassnodealerts) March 20, 2022
Interestingly, Tether saw a $353 million increase in funds sent to exchanges.
At the time of writing this article, bitcoin had already risen in value from exchanges, with $700 million exiting the market, a trend followed by altcoins, but what exactly does that mean?
Money coming from brokers, good or bad?
The outflow of money from brokerage firms always indicates an increase in investor confidence in a possible increase in the asset. Since this happens in different markets, the sentiment can be considered widespread.
This is because investors are buying or withdrawing their digital assets from hot wallets, indicating that there is no interest on their part in trading on exchanges.
If there is no interest, there is no shopping spree that can be triggered at any time. It is a strong sign that medium and long-term selling pressures will lose momentum, which is very positive for the price of cryptocurrencies.
In addition to the exit of possible optimism with Bitcoin overcoming the $40,000 resistance, it’s also possible that the reason is the lack of trust in centralized authorities to keep your money, especially after the bitcoin freeze and seizure by Canadian authorities amid of support for truck drivers.
Perhaps fears of regulators and possible government crackdown have driven many investors away from the idea of using exchanges to hold cryptocurrencies and now opting for cold wallets.
The reason for this exit could be high expectations, or extreme fear that something will go wrong. A dichotomy that well illustrates how difficult the cryptocurrency market is still difficult to analyze with certainty.
It remains to be seen whether this exit will have an impact on the price of bitcoin, which now urgently needs a break from selling pressures above its past resistance level to grow further.
Source: Live Coins
John Cameron is a journalist at The Nation View specializing in world news and current events, particularly in international politics and diplomacy. With expertise in international relations, he covers a range of topics including conflicts, politics and economic trends.