Bitcoin trades below $50,000 as fears of a major potential draw-down make the rounds on crypto Twitter and elsewhere.
BTC Inflows to Exchanges Pick Up
As prices dip lower, some holders – especially those who are not in the market to bring the bitcoin standard into existence – are undoubtedly considering selling their positions.
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While such thoughts ruminate in the collective crypto psyche, several analysts have pointed to metrics that potentially signal an end to this historic bull run, namely the relative net spike of bitcoin inflows into exchanges this week.
The spike in bitcoin inflows has not been seen since the events of Black Thursday in March 2020, further cementing concerns of more coins moving to exchanges.
Per the above chart from Glassnode, three major green spikes coincide with considerable sell events. Positive net inflows into exchanges are normally negative for price action since bitcoin holders would likely move coins to an exchange in order to sell (otherwise there’s little reason to move coins).
Still, the question remains as to whether the inflows have already been priced in or are a harbinger of things come.
US Tax Proposal Causes Sell Off?
As cryptocurrency transitions to mainstream adoption, raking in trillions in USD value with a $2 trillion market cap, some analysts have also suggested that the potential change in the US tax regime could have prompted the sell off.
However, this narrative doesn’t seem to hold water when carefully looked at in the context of a healthily cooling market. Indeed, it seems nonsensical for bitcoin holders to create a taxable event based on an announcement of an announcement which still needs to go through the US senate.
And while the rapid turn in price-action and sentiment is notable, bitcoin remains the best performing asset in the history of mankind. Cryptocurrencies tend to increase in value over a large time-horizon, making ‘red days’ all the more interesting for newcomers to gain exposure to bitcoin.
Last week, three Ethereum ETFs launched on the Torronto Stock Exchange (TSX). The easily accessible exchange vehicles are a net positive for inflows into the second largest cryptocurrency by market cap ($260 billion).
As described in the newsletter, there are two interesting scenarios for bitcoin currently unfolding. While prices could certainly stagnate for some time, bitcoin has historically proven to resume the trend when nobody is watching.
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