The amount of Bitcoin (BTC) flowing out of cryptocurrency exchanges picked up momentum on Oct. 18, hinting at weakening sell-pressure that could help BTC price avoid a deeper correction below $18,000.
Bitcoin forming a “bear market floor”
Over 37,800 BTC left crypto exchanges on Oct. 18, according to data tracked by CryptoQuant. This marks the biggest Bitcoin daily outflow since June 17, on which traders withdrew nearly 68,000 BTC from exchanges.
Moreover, over 121,000 BTC, or nearly $2.4 billion at current prices, has left exchanges in the past 30 days.
A spike in Bitcoin outflows from exchanges is typically seen as a bullish signal because traders remove the coins from platforms that they wish to hold. Conversely, a jump in Bitcoin inflows into exchanges is typically considered bearish given that the supply immediately available for selling increases.
For instance, Bitcoin bottomed out locally at around $18,000 when its outflows from exchanges reached nearly 68,000 BTC on June 17. The cryptocurrency’s price rallied toward $24,500 in the following weeks.
This time, the massive uptick in Bitcoin outflows from exchanges surfaces as the BTC price downtrend pauses inside the $18,000-$20,000 range. Interestingly, Bitcoin whales have been mainly behind the coin’s strong foothold near the $18,000 level, according to several on-chain metrics.
For instance, the Accumulation Trend Score by Cohort notes that the wallets holding between 1,000 BTC and 10,000 BTC have been accumulating Bitcoin “aggressively” since late September.
In addition, whales’ on-chain behavior shows that they have recently withdrawn 15,700 BTC from exchanges, the largest outflow since June 2022.
“Bitcoin prices have shown remarkable relative strength of late, amidst a highly volatile traditional market backdrop,” noted Glassnode in its weekly review published Oct. 10, adding:
“Several macro metrics indicate that Bitcoin investors are establishing what could be a bear market floor, with numerous similarities to previous cycle lows.”
Positive BTC fund inflows
Meanwhile, Bitcoin-based investment vehicles have also seen the fifth week of consistent inflows, according to CoinShares weekly report.
About $8.8 million entered Bitcoin funds in the week ending Oct 14, which pushed the net capital received by these funds to $291 million on a year-to-date timeframe. CoinShares head of research James Butterfill said the inflows imply a “net neutral sentiment amongst investors” toward Bitcoin.
On the flip side, Bitcoin’s technical outlook remains in favor of the bears, given the formation of what appears to be an inverted-cup-and-handle pattern on its three-day chart.
An inverted-cup-and-handle pattern forms when the price undergoes a crescent-shaped rally and correction followed by a less extreme, upward retracement. It resolves after the price breaks below its neckline and falls by as much as the distance between the cup’s peak and neckline.
Bitcoin’s price could fall toward $14,000 if the inverted cup and handle play out as mentioned, in accordance with previous reports, or a 30% drop from current price levels.
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