Bitcoin exchange inflows fall 15.5% as whales pause near $79K: Is demand falling?

Since early August, Bitcoin’s market structure has strengthened as prices rose while exchange deposits declined. The price of Bitcoin [$BTC] increased by approximately 25%, from approximately $63,000 to approximately $79,000.

In that time frame, most of the buying interest was coming from larger participants.

Conversely, the amount of mid-sized coins going into Binance, Coinbase Pro, and Coinbase Prime decreased by an estimated 15.5 percent during this time.

Overall there were fewer mid-sized coins entering exchanges, which would have added additional sellable coins into their respective order books.

The largest decrease was at Binance, where the number of mid-sized coins going into their platform dropped almost 30% from 4,390 $BTC to 3,080 $BTC. This indicates that larger, mid-sized coin investors are choosing to hold rather than sell their coins during the increase in price.

This reversal produced a 1,160 $BTC swing between both venues. As such, it appears that large mid-size investor activity is shifting between different exchanges. However, no increase in overall selling pressure was evident.

Hence, if the low inflow levels continue, they will help support current price levels. However, any continued increases in price will need to be sustained through ongoing demand.

The majority of the price increase was therefore a result of retail and institutional investors rather than whales. In turn, this left Bitcoin’s 25% rally without stronger support from its largest holders.

The majority of the price increase was therefore a result of retail and institutional investors and not whales. Furthermore, whales have maintained their balance levels since the 2nd of September with an average balance of approximately 5.22 million $BTC.

Softer inflation could restart accumulation and strengthen the rally. On the other hand, firm inflation or tighter policy could delay buying and weaken momentum. Thus, while reduced exchange selling is still beneficial for Bitcoin, whale demand remains missing.

That caution is also appearing in Bitcoin ETFs, where investors have now started reducing exposure near $79,000. Funds lost $46.65 million on the 8th of September, followed by $120.24 million the next day.

Those withdrawals reduced total net assets from $99.52 billion to $99.33 billion, showing weaker demand near recent highs.

However, the flows remain positive at $622.7 million in September. Therefore, this recent sell-off has not eliminated previous demand.

Meanwhile, ETF losses have recovered from an $18 billion low toward break-even as Bitcoin rebounded. This decline in losses will act as a resistance level if prices do recover beyond this point and could result in buyers returning to profitability, thus eliminating future selling.

Conversely, failure to overcome this resistance may lead to continued outflows, limiting Bitcoin’s potential upward movement.

Final Summary