Bitcoin Exchange Inflows Shrink Amid $125,000 Rally – More Upside Ahead?

As Bitcoin (BTC) hit a new all-time high (ATH) of $125,708 on Binance yesterday, BTC exchange inflows are starting to show signs of slowing down. As a result, crypto analysts are confident that the top cryptocurrency by market cap may be on the cusp of a healthy rally.

According to a CryptoQuant Quicktake post by contributor ChainSpan, fresh on-chain data shows that the average amount of BTC inflows into exchanges such as Binance has decreased significantly.

To recall, BTC sent to exchanges is usually seen as a warning sign, as it suggests that investors are attempting to sell their holdings at prevailing market prices. As a result, high inflows to exchanges typically create selling pressure on the underlying asset’s price.

On the contrary, a decrease in exchange inflows indicates that BTC holders are opting to hold their assets in cold wallets. One of the cascading effects of lower exchange inflows is that it could lead to a “supply crunch” for BTC, which may lead to extraordinary price appreciation in a short duration.

ChainSpan noted that as Bitcoin’s price surged from $108,000 to $125,000 over the past few weeks, the inflow average for the cryptocurrency has dropped from 0.55 to 0.48. This suggests that the current rally is being driven by organic market demand and holding behavior.

Put simply, the increase in BTC’s price is not happening in tandem with a speculative selling wave, but rather on a foundation of reduced selling pressure. The analyst added:

In the short term, this backdrop supports the upward trend. Yet, if large inflows into exchanges suddenly appear in the coming days, it could be a sign that major players are preparing to sell. In such a case, a short-term correction in the price may follow.

The CryptoQuant analyst concluded by saying that although the current market conditions point toward low selling intent and strong demand for BTC, a sudden spike in exchange inflows could derail the digital asset’s momentum. As a result, investors should keep a close eye on the metric.

While BTC has already created a new ATH, some crypto analysts forecast that the digital asset may record more gains in the coming quarter. Crypto analyst Rekt Capital predicted that BTC could peak sometime in mid-November.

Similarly, recent analysis by the team at The Bull Theory forecasts that BTC may surge as high as $143,000 in October. Historically, October has been one of the strongest months for BTC in terms of price appreciation.

That said, BTC must first ensure it decisively breaks through the stiff resistance at $125,000 and defends the support level at $118,000. At press time, BTC trades at $125,189, up 1.9% in the past 24 hours.