On-chain data could suggest that huge Bitcoin inflows into the Gemini crypto exchange could be the cause of the recent slump.
Huge bitcoin inflows to Crypto Exchange Gemini
As mentioned in a CryptoQuant post, these BTC inflows to Gemini could be the reason behind the current downtrend in crypto price.
Bitcoin inflow is an indicator that shows the amount of BTC that has been transferred into exchange wallets. The opposite metric is known as the outflow.
The difference between the inflows and outflows gives the stock exchange net flow. If the value of this indicator is positive, it means that the inflows outweigh the outflows.
On the other hand, a negative netflow means that more Bitcoin is going out of the exchanges than in. Now here is a diagram for the BTC Gemini netflow:
Gemini received huge inflows shortly before the price dip | Source: CryptoQuant
As the graph shows, the BTC price began to decline as soon as Gemini noticed negative spikes in netflow.
The reason for the slump is that large inflows mean whales are putting their coins on the exchange for sales / altcoin purchases.
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However, as the graph shows, large inflows are not the only necessary condition for a price decline. There are two other indicators that affect the price, namely the BTC spot reserves and the stablecoins metric issued.
The spot reserves are the total amount of Bitcoin in the wallets of all exchanges. If the value of this indicator rises, it means that exchanges are seeing large inflows across the board.
On the contrary, if cash reserves decline, it means that the exchanges are seeing higher overall outflows. Looking at the graph above, the rising cash reserves seem to lead, as expected, to a decline in the price.
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The graph also shows that if Gemini receives large inflows while cash reserves are falling, the price will not be adversely affected. Similarly, large amounts of stablecoins appear to have a similar effect.
At the time of writing, Bitcoin is priced at around $ 44,000, up 8% over the past 7 days. In the past month, the cryptocurrency has amassed 34% in profits.
Below is a graph showing the changes in value of the coin over the past three months:
BTC's price seems to be crashing down | Source: BTCUSD on TradingView
After Bitcoin peaked not far from the $ 47,000 price mark, it appears to be moving sharply downward. As explained above, this could be related to the tributaries to Gemini.
Some signs still seem bullish on the crypto, so it’s hard to say which direction it will go next. However, if such inflows continue, a bear market could be imminent.