On-chain data shows the Bitcoin price has followed a particular pattern when the BitMEX whales have made large withdrawals.
Bitcoin Exchange Netflow For BitMEX Has Seen A Red Spike Recently
As an analyst in a CryptoQuant Quicktake post pointed out, the cryptocurrency exchange BitMEX has recently observed significant withdrawals from the whales.
The indicator of interest here is the “exchange netflow,” which tracks the amount of Bitcoin entering or leaving any exchange’s wallets. The metric’s value is calculated by subtracting the outflows from the inflows.
When the value of this metric is positive, it means that the inflows outweigh the outflows right now, implying that the investors are depositing a net number of coins to the platform.
Generally, one of the main reasons holders want to transfer their BTC to exchanges is for selling-related purposes, as this trend can have a bearish impact on the asset’s price.
On the other hand, the negative indicator implies net withdrawals are taking place on the exchange. Such a trend can suggest either some fresh buying is occurring or some existing investors are simply transferring the BTC they already own towards self-custody.
In either case, the holders withdrawing from the exchange’s custody can be a bullish sign for the cryptocurrency, implying that these investors potentially plan to hold onto their coins for extended periods.
Now, here is a chart that shows the trend in the Bitcoin exchange netflow for the BitMEX platform over the last few months:
As displayed in the above graph, the Bitcoin exchange netflow for BitMEX has registered large negative values just recently. The investors have withdrawn about 4,000 BTC (equivalent to $168.3 million at the current exchange rate) from the platform during this net outflow spree.
The quant has explained that the price of the cryptocurrency and this metric have followed a specific pattern whenever this trend has occurred. Below is a zoomed-out indicator chart showing the previous instances where negative spikes took form.
“When a significant volume of Bitcoins is observed leaving BitMEX, one of the leading cryptocurrency trading platforms, it often signals the formation of local bottoms in the price of Bitcoin (BTC),” notes the analyst.
The graph shows that large net withdrawals also occurred on the exchange right before the current rally in the cryptocurrency’s price began in October of last year.
It’s possible that these historical negative spikes in the…