With blockchain data showing bearish market sentiment is weakening, oversold bitcoin may succeed in establishing a foothold above $40,000. The cryptocurrency crossed above the psychological hurdle soon before press time, having put in lows near $37,000 during the Asian hours.
- The seven-day average of net bitcoin inflows to exchanges turned negative for the first time since April 22, data provided by Glassnode show.
- That means coins are leaving exchanges after a gap of four weeks, a sign of investors are starting to take direct custody of their holdings, possibly anticipating a price increase.
- The fewer coins available for sale on exchanges, the better the chance of the market going up.
- Investors typically transfer coins to exchanges when they want to sell their holdings, so consistent net inflows represent a bearish mood, with outflows signaling bullish sentiment.
- The seven-day average of net flows turned positive on April 22, and rose to a 14-month high of 10,628 BTC on May 17, a sign some holders may have been panicking.
- The bitcoin sell-off gathered pace, with prices dropping to lows near $30,000 on May 17. The decline marked a slump of more than 50% from the record-high $64,801 reached on April 1.
- The panic looks to have subsided this week, with the balance held on exchanges dropping by 7,597 BTC to 2.53 million.
- Further outflows from exchanges may be needed to restore battered market confidence and put the cryptocurrency back on a bullish path.
- Consistent outflows accompanied bitcoin's 13-month surge from $5,000 to over $60,000, with the balance held in exchange wallets falling by more than 615,000 BTC from March 2020 to April 2021.
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