Decrease in Bitcoin Flows to Crypto Exchanges Drops to 2016 Standards
In the final weeks of 2024, daily Bitcoin deposits on exchanges dropped to 30,000, marking a significant decrease from the peak of 125,000 deposits per day in the current cycle. This decrease, combined with a low ratio of total BTC inflows to total exchange reserves, could signal an impending Bitcoin rally, according to CryptoQuant analyst Alex Adler Jr.
The low ratio of BTC inflows to exchange reserves, typically recorded at the end of a bear market, indicates that most Bitcoin on exchanges is held rather than moved frequently for selling. This suggests a stable or accumulating exchange reserve, rather than active selling, and reflects strong holder conviction or accumulation phases.
Adler Jr. believes that this drop in deposits and the current market conditions could indicate the end of a bear market. Such a low level of deposits could lead to a Bitcoin shortage on the spot market, a scenario that occurred before major rallies in the past.
The $17,000 price level has been mentioned as a point where more experienced investors bought coins from forced sellers in the past. Another indicator of potential price growth is the ratio of total BTC inflows to total exchange reserves, which is currently three times lower than the average over the past 10 years.
Market reports have noted strong institutional interest in Bitcoin ETFs and growing inflows in that segment, suggesting increasing investment demand in Bitcoin exposure without selling strong underlying BTC holdings. Bitcoin price technical indicators, such as the formation of golden crosses and ETF inflows, alongside declining exchange deposits, support an environment for potential bullish momentum.
Despite volatility and ongoing market evolution, crypto adoption and infrastructure improvements make a bullish case stronger if sellers remain scarce on exchanges. Thus, the combination of falling Bitcoin deposits onto exchanges and low inflow ratios implies market participants are likely holding or accumulating BTC rather than selling, which bodes well for possible upward Bitcoin price movements in 2025.
[1] Source: CryptoQuant Analysis and Market Reports [4] Source: Crypto Adoption and Infrastructure Improvements Data
The low inflow ratio of Bitcoin to exchange reserves, driven by reduced daily deposits onto exchanges, hints at a decreasing supply for the spot market, potentially resembling a condition before significant rallies, as pointed out by CryptoQuant analyst Alex Adler Jr. [1]
Investment demand in Bitcoin exposure is growing, with increasing institutional interest in Bitcoin ETFs, as reported in market studies, signaling a strategic approach to investing in the Bitcoin finance ecosystem without selling underlying BTC holdings, thereby bolstering the case for potential bullish momentum. [4]
