Key Points
- Bitcoin’s exchange flows indicate a bullish trend, with outflows suggesting investor optimism.
- Resistance around $87K, with over 900K addresses holding 662K BTC, could lead to a large sell-off.
Bitcoin’s exchange flows provide insight into investor sentiment. Currently, these flows are indicating a bullish trend. However, the question remains whether this trend will persist.
On February 25, about 8.4K Bitcoin moved into exchanges, signaling selling pressure. This led to an 8% drop in Bitcoin’s price. However, the following day saw a surge in outflows as investors moved towards holding, leading to a quick reversal. Within a week, Bitcoin rebounded by 12%, reclaiming the $94K mark.
Insights from Exchange Flows
Examining the movement of Bitcoin in and out of exchanges provides an idea of investor sentiment and potential future movements. Currently, sustained outflows suggest a strong bullish momentum.
Historically, such patterns have indicated Bitcoin bottoms, often leading to sharp reversals and significant upside movements. For instance, during the New Year rally, Bitcoin ended 2023 at $93,384. A week later, it soared past $102K, marked by consecutive red wicks indicating over 50K BTC accumulated.
Identifying Resistance Zones
A week ago, Bitcoin dropped to $78K, a three-month low. However, within four days, Bitcoin posted a strong green candlestick, gaining 9% in a single day and pushing past $96K. This was driven by Trump’s pro-crypto endorsement.
Despite this, Bitcoin is now 12.5% below that peak, with the majority of the gains erased. Current price action suggests resistance around $87K. Over 900K addresses holding 662K BTC are set to move into profit, putting $57 billion worth of Bitcoin at risk of a large sell-off.
While exchange flows point to a bullish structure, market volatility is at extremes. Therefore, investors should tread carefully. The potential to test this resistance in the coming sessions exists, but reclaiming $90K remains a difficult hurdle.