Bitcoin Risks Deeper Price Pullback as Exchange Inflows Spike

Sep 3, 2020 at 11:34 UTCUpdated Sep 3, 2020 at 11:37 UTC

Bitcoin prices Sept. 1-3 (CoinDesk BPI)

Bitcoin (BTC) may soon extend Wednesday’s price pullback, according to a data metric that suggests there’s increased selling pressure in the market.

While the top cryptocurrency by market value fell by 4% on Wednesday, it defended the long-held support zone of $11,100–$11,200.
Exchange platforms witnessed an inflow of 92,000 BTC on Wednesday – the biggest-single day rise in 37 days, according to blockchain intelligence firm Chainalysis.
“Inflows surged as people rushed to sell at near $12,000,” Philip Gradwell, chief economist at Chainalysis, tweeted early Thursday.

btc-inflows-to-exchanges — Bitcoin inflows to exchanges

Gradwell believes that the selling pressure (arising from the exchange build-up of 92,000 BTC) has probably not been fully absorbed yet.
That’s because bitcoin’s median trade intensity, which measures the number of times an inflowing coin is traded, remained low at 3.113 – well below the 180-day average.
Put simply, there were not enough buyers to match sellers.
As such, coins that weren’t liquidated yesterday could still be offloaded into the market in the short-run, causing a more profound price decline.

btc-trade-intensity — Bitcoin trade intensity

“I think there is still sell pressure to work through,” Gradwell said.
Bitcoin is currently trading near $11,300, representing a 0.7% decline on the day.
As discussed Wednesday, a violation at immediate support at $11,170 would confirm a bearish reversal pattern on the technical charts.

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