In this Analysis, I am looking at Exchange inflows, spending and other metrics to try to indicate if Institutional investors are buying.
In the hourly chart below, I took a look at all BTC exchange inflows(top) and compared it to BTC Coinbase inflow(bottom).
In this chart, I want to display inflows of over 3200 BTC for all exchanges and inflows for 1600 BTC for Coinbase exchange. This can be seen by inflows breaking above the red dotted line. The black dotted line is the $30k BTC price level in USD.
Here we can see that every time Bitcoin’s price breaks above 30k, then there is influx of inflows incoming onto exchanges. This influx of inflows is to predict the inflows that are done by institutions rather than retail. 1600 BTC is worth approximately $50 million at the time of this writing and 3200 BTC is worth approximately $100 million. Retail normally do not move or own that much BTC.
The inflows that we see going onto exchanges, increases sell pressure. I included Coinbase due to their exposure to institutional investors.
This next chart was a quick take by CryptoQuant.
In this chart, CryptoQuant is monitoring institutional players in North America through looking at Coinbase and predicting their sell pressure and spending behavior. This also indicates that every time price breaks above $30k then coins are moved in response too. (Possibly selling)
Next, I took a look at BTC spending. These are hourly charts so, spending just spiked for holders holding between 100–10k BTC worth ranging between $3 mil to $300 mil.
(In the chart below, I wrote BTC inflows as the title accidently, but this is BTC spending)
This is to explain the resistance we’re seeing. Basically, to rally past resistance, we need buyers. But we’re seeing more sellers selling resistance, which is what you “should” technically do during a bear market for traders. you sell resistance. (not financial advice, but is just my opinion)
In this next chart, we are taking a look at the number of addresses based on the supply distribution they are holding.
Here, we can see that there is a downward trend of address holding a balance of 10k + BTC. These addresses are often exchanges and market makers.
- An important thing to note is that sometimes, when exchange reserves get too much BTC inflows, they will move some BTC off exchange and into other addresses; therefore, possibly increasing the number of addresses holding over 10k BTC. This will look like humpback whales are buying, but instead, it is risk management and best practices for the exchanges in case of hacks.
Next, we see a consistent number of addresses holding between 1k-10k BTC.
However, when an address from the upper supply distribution group such as holders holding 10k+BTC, if they do sell enough of their address supply to drop below 10k BTC, then that address does move into the 1k-10k BTC or whichever distribution that the address has left.
Below, in the 2nd bottom panel, we look at holders holding between 100–1k BTC. We can see that there has been a downward trend of this supply distribution group. And finally, we look at holders holding 10–100 BTC. here we are seeing an upward trend. However, I think this upward trend is caused from sellers selling their Bitcoins from the larger supply distribution groups.
This decreasing trend leads me to believe that more institutions are selling rather than buying.
In this next chart below, we are taking a look at the taker buy sell ratio and RSI. In my previous article, I talked about how the taker buy sell ratio is a good indicator for predicting price rallies.
Here, we can see sell off periods and accumulation periods. Sell off periods normally occur in high price and accumulation period normally occurs during price support.
In the first rectangle box of accumulation was the bear flag. During this, we can see both the taker buy sell ratio and RSI trending upward. However, price just could not break resistance. This tells me that majority of the volume and price action came from retail buyers. This was then followed by a sell off which led us to the current price and another accumulation phase.
However, what concerns me currently in the 2nd green box, is that the increase in buying and increase in RSI is not being reflected in the price. Price has not been able to break resistance and rally upward.
A big part of why we are seeing such resistance was answered above where I mentioned that more institutions are selling rather than buying currently.
In conclusion, based off of what I am seeing, there is just not enough institutional buying to cause a price rally. But instead, institutions are using the price rally as an opportunity to sell.
I personally still believe that a potential short-term price rally may occur with the increase buying activity that I am seeing from the taker buy sell ratio and increasing RSI. The question is really, can we get there and break resistance for a short-term rally? We will have to see how the market behaves in the future days, weeks and months to come.
This article is not financial advice but is instead my analysis of my interpretation of the market through looking at charts and metrics. This article should be used for entertainment purpose only.
