Investors who recently bought Bitcoin are transferring tens of thousands of Bitcoins to cryptocurrency exchanges at a loss. As Bitcoin falls below the $70,000 mark, this has further exacerbated market concerns about selling pressure.
The total inflow is close to 48,500 BTC. Calculated at the current price of Bitcoin, which is about $74,000, this amounts to approximately 3.6 billion US dollars.
November lows
The charts from the research company below show transfers, not completed sales. Sending Bitcoin to an exchange may be the first step in a sale, but some deposits are also made to trade other tokens, serve as collateral, or for other purposes. This data also cannot accurately indicate how much of the transferred Bitcoin is subsequently sold.
This distinction is very important because the chart measures the behavior of short-term holders, which CryptoQuant typically defines as investors who hold Bitcoin for less than 155 days.
Such investors are often the most vulnerable to sudden price reversals, especially when the market value of their holdings is below the purchase cost.
New buyers are moving coins underwater.
In an analysis on November 11th with the identifier CryptoQuant, researcher Amr Taha pointed out that there were two waves of large-scale "losses" in exchange deposits over the past week: 50,790 BTC on November 3rd and 46,060 BTC on November 10th.
Taha wrote: 'On November 10th, the profit transfer amounted to about 1,700 BTC, which means that for every 1 coin transferred as profit, there were approximately 27 coins transferred as losses.'
This is an abnormal, one-sided flow of funds. The majority of investors who transfer coins to exchanges do so at prices lower than their purchase costs, rather than realizing profits from the earlier increases in price.
Similar patterns have occurred in the past few months, with situations where traders switch to exchanges while in a loss-making state recurring as the price of Bitcoin fluctuates up and down. This latest red peak seems to be close to the lowest level seen since July.
Why is there an active transfer of recent coin age on Binance?
Another chart of CryptoQuant breaks down the deposits flowing into Binance based on the last time there was a transaction on the blockchain for Bitcoin. The chart shows that on November 1st, there were 3,290 BTC coins that came from a transaction time one day to one week prior, while on November 3rd, there were an even larger number of 8,114 BTC coins from the same category.
According to the analysis of Taha, on November 9th, the platform also received 1,925 Bitcoins that were last moved on the chain one to three months prior. This data is helpful in identifying which age groups of coins are currently active, but it does not necessarily indicate when the holders initially purchased these Bitcoins.
Binance The chart measures a single exchange and is grouped by the last time the coin moved on-chain. The profit and loss chart, on the other hand, tracks the situation of short-term holders transferring coins to the exchange more broadly.
Time points are very important because Bitcoin is falling from a high above $85,000 in late September to the range of $73,000 to $74,000 visible at the end of the screenshot. If a newer buyer purchases at $80,000, then their paper loss would be about 7.5% when Bitcoin is at $74,000; if they sell at that price, they would lock in that loss.
The recent weakness is not limited to short-term holders. Glassnode pointed out that approximately 4 million BTC held by long-term investors were purchased between $85,000 and $118,000, which may indicate that there is another portion of “underwater” supply above the current price.
