Bitcoin has rebounded from the highs of the $20,000 price zone. At the time of writing, BTC is trading at $32,475 with increasing volatility over the past few days.
The bulls faced tough times during May and June as the bears took over the price action with increasing selling pressure across all exchange platforms.
As Bitcoin moved into the crucial support at $29,000, Cryptoquant registered an increase in BTC inflows to the exchange. As the image below shows, the last time BTC entered the exchange was in March 2020, when the price of BTC fell below $4,000. “Black Thursday”.
Furthermore, Cryptoquant’s 7-day moving average of spot exchange net flow recorded a positive. Last time this metric was at similar levels, Bitcoin Experience Delivery in the range of $50,000.
Many traders have been questioning the validity of this amount BTC flows to the exchange as a relevant metric to predict a course in price action. Some believe that whales can easily manipulate the market by sending BTC to these platforms and profit from the fear experienced by investors.
However, Cryptoquant CEO Ki-Young Joo believe that This type of “Sipes is almost impossible”. The platform uses a mechanism to measure exchange flow data by the number of transactions. Thus, they calculate their data by looking at the overall flow, not a single transaction.
This is why we need to look at aggregate flows rather than single transactions like whale alerts. Every transaction can be easily manipulated by whales. In order for our data to go to waste, whales need to send over 10K+ BTC, but most are internal transfers from large TX exchanges.
Young Xu said that the only way for this data to be wrong is for whales to coordinate their transactions. In this way, exchanges will receive thousands of BTC flows, and “data will be wasted”. Young Ju said:
(…) But it hasn’t happened yet. It’s very expensive and dangerous for safety reasons, so I think whales can’t do this well planned effort
Bitcoin Bear Market confirmation?
In a separate tweet, the CEO of Cryptoquant claimed that bitcoin has “confirmed” Bear Market trend. He based his statement on the high volume of BTC inflows to the exchange, as shown in the platform’s Whale Capitulation Index.
Cryptoquant’s chart shows that whenever whales start selling such amounts of BTC, the price goes down. However, Young Xu said that investors should not rely on one indicator to predict price action.
Young Joo received some critics for this statement. Economist and crypto analyst Michael van de Pope gave the following answer to this claim: “I see 0 correlations” between a Bear Market and BTC exchange flow. Later, the executive clarified:
To be clear, I expect my $BTC bearish bias not to last long (maybe just a few weeks) as the market looks good in terms of supply/demand over the long term (eg, Stablecoins Ratio (USD) and SSR) ). So don’t get me wrong, I’m not saying it’s over.