Bitcoin Exchange Inflow Mean Spikes, Pullback Soon?

On-chain data shows that Bitcoin’s “exchange inflow mean” has observed a spike recently, something that could be bearish for the asset’s value.

Bitcoin Exchange Inflow Mean Has Spiked To High Values

As pointed out by an analyst in a CryptoQuant post, a correction may soon be coming for the cryptocurrency. The “exchange inflow mean” is an indicator that measures the mean amount of Bitcoin that’s currently being deposited into the wallets of all centralized exchanges.

This metric isn’t to be confused with the “exchange inflow,” which tells us the total amount of BTC going to these platforms. While the exchange inflow is useful, it may not provide an accurate picture of the trend being followed across the market, as only a few whales, who transfer huge amounts, can easily skew the metric.

The exchange inflow mean, on the other hand, calculates the amount that the average inflow transaction is moving right now, which gives a better representation of the behavior of the average investor in the market.

When the value of this indicator is high, it means that the average holder is sending a high number of coins to exchanges currently. As selling is one of the main purposes behind investors depositing to these platforms, this kind of trend can be a sign that the investors are participating in large amounts of selling at the moment.

Now, here is a chart that shows the trend in the Bitcoin exchange inflow mean over the last few days:

As highlighted in the above graph, the Bitcoin exchange inflow mean has registered a sharp spike during the past day. This would suggest that the average investor has ramped up the amount that they have been sending to these platforms.

At the peak of this spike, the indicator had reached a value of 18.45, which means that the mean amount of transactions going towards exchanges was about 18.45 BTC.

From the graph, it’s visible that the levels that the metric has hit during this latest surge are unlike any seen since the latest rally in the cryptocurrency’s price started.

So far, Bitcoin hasn’t noticed any bearish effect from this exchange inflow mean spike, as the coin has been moving sideways. This may suggest that if these large deposits were indeed made for selling, the market currently has enough buying pressure to not feel any negative effects from them.

Though, another possibility is that the spike was a sign that the investors have only deposited the coins in advance; they haven’t actually pulled the trigger on selling them yet. In this scenario, a pullback could appear for BTC in the near future.

BTC Price

At the time of writing, Bitcoin is trading around $30,300, up 14% in the last week.