The Daily Dive - Exchange Flows And Demand Momentum

March 2022 Was Second-Largest Outflow Month

Over the last week, we’ve seen some of the strongest change in exchange outflows since October 2021 with more than 92,000 BTC leaving exchanges over the last 30 days. With the latest Glassnode data, March 2022 ended up being the second-largest ever exchange outflow month, behind October 2020. 

Another way to view the exchange flow dynamics is to look at the net flow volume relative to adjusted supply, which removes coins that haven’t moved in more than seven years. Since these coins are unlikely to return to the market, excluding them helps paint a more realistic picture of available supply. 

When there’s more outflow from exchanges relative to estimates of adjusted supply, the available free-float supply becomes much more constricted in the market. The below chart emphasizes unique periods when outflows are significant relative to adjusted supply. 

Another interesting data point is that the 30-day percent change in supply held by whales turned positive just yesterday, which shows that larger whale entities are now adding back to their stack as retail continues to grow at the strongest pace we’ve seen over the last few years. The below estimates for supply held by whales includes entities with more than 1,000 BTC less balances on exchanges. 

When evaluating the amount of bitcoin owned by retail entities, demand looks to be going exponential, with every address cohort (as displayed in the bottom pane in the graphic above) growing their share of circulating supply over the previous month. While retail buyers are almost always adding to their holdings, moments of extreme accumulation are particularly notable, which the latest data shows. 

Lastly, we have the number of active entities, using a 90-day moving average. This data has been valuable at signaling when demand may be leaving or entering the market. Currently, we’re starting to see active entities pick up on the network and accelerate on a larger 3-month trend. 

All of these metrics are signaling more momentum and spot strength for bitcoin, short-term. If exchange outflows continue at a high pace, whale supply continues to grow in this price range and demand continues then that strengthens the case for a change in market sentiment. Yet, we’re still cautious about what macro growth slowdowns could mean for risk assets and bitcoin in the medium-term.