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Bitcoin Shows Strongest Bullish Signal in 3 Weeks

February 2, 2021 at 21:40 by Ibrahim Anifowoshe

After Bitcoin failed to move past the $40,000 hurdle, all eyes have remained on the king cryptocurrency. At 22:05 GMT, Bitcoin was trading at $35,785, a 5.97% gain in the last 24 hours. At press time, outflows from exchanges were high.

It appears that 15,000 BTCs have flown out of Coinbase at the $32,400 price level. Such a significant outflows signals a bullish shift in the price rally as the pioneer cryptocurrency outflow transactions have moved to custody wallets that support incoming. This may mean that these transactions represent OTC deals from institutional investors. These transactions remain the strongest bullish signal in the last three weeks.

Ki Young Ju noted this signal on Twitter:

Massive Coinbase outflows. 15k $BTC at 32.4k Looking at the TX, it went to custody wallets that only have in-going transactions. It’s likely to be OTC deals from institutional investors. I believe this is the strongest bullish signal.

coinbase outflows

These metrics are crucial in understanding the direction of Bitcoin price action. Coinbase outflows are important and have proven useful in understanding the market sentiment since there’s no specific way to estimate OTC transaction volume by institutional investors. Notwithstanding, on-chain indicators like these can help in the estimation of OTC deals.

This shows that institutions are still buying Bitcoin. It’s a positive sign as outflows mean that exchange reserves are dropping and scarcity is in play.

Based on data from Glassnode, there were $1.6 billion outflows against $900.6 million inflows. While the headlines may show DEFI and ETH, investment are still flowing into Bitcoin. The pioneer cryptocurrency market dominance still remains at 62.3% high.

As outflows from exchanges increases, bullish rally may begin to show on price and trade volume chart. The price recovery may also go above $35,000.

Visa’s entrance into market is important

An interesting development to consider is also Visa’s preparation to handle full range of digital currency assets. This might boost demand and volatility even more. Visa identifies cryptocurrencies in two categories: digital currencies like Bitcoin and Ethereum; and fiat-backed currencies like stablecoins. This means that investment inflows to Bitcoin may continue uninterrupted.

What should be noted is that institutional investment is pushing a bullish leg for Bitcoin in the short-term. This is coupled with high outflows from exchanges and an increasing demand.

If you have any questions and comments on Bitcoin today, use the form below to reply.

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