The net amount of Bitcoin entering or leaving centralized exchange wallets, also known as exchange netflow, has recently witnessed a significant negative spike. This could be a bullish indicator for the Bitcoin price, as explained below.

Plunge in Bitcoin Exchange Netflow

The exchange netflow changes over time, reflecting the inflows and outflows of Bitcoin from exchange wallets. A positive value for this indicator implies that more BTC is entering these wallets than leaving, which generally has bearish implications for the price of the asset. Conversely, a negative value for the indicator suggests that the outflows are exceeding the inflows, potentially indicating that Bitcoin’s holders are accumulating it and hence could lead to price appreciation.

An analyst at CryptoQuant notes a recent negative spike in this metric, suggesting that investors have withdrawn a considerable number of coins from these platforms. Similar negative spikes were observed earlier this month, which could have been a sign of whales attempting to catch the bottom as the asset’s price slipped below the $28,000 and $27,000 marks. This latest plunge followed Bitcoin’s decline, dropping to around $26,000. It represents the second-largest net outflow spike this year, with only the withdrawals around the $27,000 level being greater in scale.

Although such outflows are not enough to trigger a price reversal, they could show buying pressure and confidence among some whales at current prices, which could ultimately contribute to the price hitting a bottom. Adding to this, the daily Relative Strength Index (RSI) has formed a potential bullish divergence recently, which could also be another factor to consider.

Currently, Bitcoin is trading around $26,800, up 1% in the last week.