Before the collapse of the price of bitcoin to $ 30 thousand, the largest influx of cryptocurrency on the exchanges was recorded. After the recovery of the coin rate, there was a record outflow from trading floors. Are these events related, and how should a trader perceive such signals?
On Wednesday, May 19, for the first time since January of this year, the value of bitcoin dropped to $ 30,000 per coin. As a result of the collapse of quotations, traders lost more than $ 8 billion due to the liquidation of margin positions. The largest liquidation was $ 67 million, it happened on the Huobi crypto exchange in a dollar / bitcoin pair.
How events developed?
The collapse of quotations was preceded by a record inflow of bitcoin to the largest crypto exchanges since March 2020 . It began on May 18, when almost 23 thousand BTC were brought to trading platforms in just one hour.
On May 18 and 19, the largest influx of bitcoin into the Binance cryptocurrency exchange in the entire history of its existence was noted. Within 48 hours, users transferred 38 thousand bitcoins to the accounts of the site, which at that time amounted to $ 1.38 billion.
On the evening of May 19, when Bitcoin began to recover from the collapse, BTC began to be withdrawn from the platforms. As a result, the largest outflow of BTC was recorded in a year .
Crypto exchange users per day brought about 175 thousand bitcoin to cold wallets for $ 7 billion at the exchange rate at that time. The next day, it became known that during the fall in the price of bitcoin to $ 30 thousand, large investors and funds began to buy it .
Where to track the movement of coins?
Information about large movements of cryptocurrency is provided by various services, for example, Whale Alert on Twitter. Also on this social network, you can track various statistics related to digital assets using the Glassnode Alerts service .
The Telegram messenger runs a bot of the analytical company CryptoQuant , which monitors large-scale transactions using digital coins in real time.
Correlation of displacement and course
There is a certain relationship with large transfers of bitcoin to sites, says the head of the data analysis department of CEX.IO Broker Yuri Mazur.
But the current situation was slightly different, since a large share of the transferred bitcoin fell on the Binance exchange, and a fairly calm background was observed on other exchanges, which indicates the “bearish” sentiments of users of this particular site, the analyst noted. In his opinion, this behavior may be related to user concerns due to checks against Binance.
Transfers of large volumes to exchanges indicate a probable impulse fall, but one cannot speak of a clear correlation, says Maria Stankevich, Development Director of the EXMO crypto exchange.
According to her, it can be both actual transfers by large players to “drain”, and a simple reaction of observers who begin to panic and dump bitcoin, staging a sale.
How to take such signals?
The transfer of bitcoin to exchanges indicates the intention of the holder to sell it, but large transfers of digital coins require a comprehensive analysis, Yuri Mazur believes.
“Even though we cannot speak with confidence about direction indication, we understand for sure that we should expect impulse movement,” added Maria Stankevich.
A large-scale withdrawal of bitcoin from exchanges to cold wallets should be taken as an indicator of the growth of long positions, says Mazur. Investors who bought Bitcoin at levels near $ 30,000 have ambitious goals and are ready to hold positions for a long time.
