Whales Accumulate Bitcoin In January, 2022

Bitcoin Exchange Outflows Show an Uptick. Bull Run in the Making?

by Bogdan Giulvezan

Exchange inflows and outflows are oftentimes a good indicator of future price action for the crypto market in general and Bitcoin in special. According to on-chain data analytics firm CryptoQuant, the Bitcoin exchange outflow has recently increased and this may have bullish implications.

To put it simply, inflow means that people are moving their Bitcoin to exchanges, usually with the purpose of cashing out or converting it into altcoins. If people sell, common sense says that price will go down. On the other hand, outflow means that investors are moving their Bitcoin out of exchanges, usually with the purpose of hodling the coins in their own wallets. This suggests that those investors are anticipating a period of bullish movement. Large outflows or extended periods of outflows suggest that whales are accumulating and this is a stronger sign of future bullish price action.

At the time of writing, Bitcoin is trading around $43,000, after a bounce at $40,000 support; however, it barely missed $45,000 and failed to threaten this key resistance. It must be noted that the US Dollar Index (DXY) is currently trading at 94.76, after reaching a weekly high of 96.22. In other words, the US Dollar is weakening and this may be the reason for the pair’s bullish bounce at $40,000 support earlier this week, not necessarily Bitcoin strength.

Chart Analysis – BTC/USD

Probably the most important thing that we can see on the Daily chart below is the bounce at $40,000 that happened at the beginning of the week. There’s a cluster of candles there, all with small bodies and long wicks, indicating that the level is acting as an important barrier.

At the time of the bounce, the Relative Strength Index was showing an oversold condition, thus making the buy signal even stronger but despite this, it seems like the bulls have already run out of steam. The pair didn’t manage to stay above the long-term bearish trend line and couldn’t even break the shorter-term trend line (drawn from the November peak).

This leaves us with two possible outcomes: if Bitcoin bulls manage to take price relatively quickly above $45,000, then we might see a longer period of upside movement, possibly above the 50 days Moving Average. Otherwise, the bears will likely take back control and take price below $40,000.