It has been a relatively stable week for Bitcoin, with the leading cryptocurrency by market capitalization witnessing minimal fluctuations in its price.
Bitcoin saw its largest red day on Wednesday after dropping around 3% amid worries over US debt uncertainties and President Biden’s stance against tax waivers for crypto traders. However, the price managed to regain ground late Thursday after a brief dip to $25,995, pushing past the key resistance level of $26,000 and closing at $26,500.
Overall, while the price has not moved much since mid-May, a key metric exchange metric has emerged, allowing investors to gauge potential shifts within a price range that has held over the past two or so weeks.
On Thursday, May 25, Tomáš Hančar, an analyst at on-chain analytics firm Cryptoquant highlighted that Bitcoin had seen a significant drop in exchange inflows, reaching a six-year low. According to the pundit, the trend, which began in early May 2023, has continued at a rapid pace, with the current levels not witnessed since mid-January 2017.
“Exchange depositing transactions have been breaking historical lows since early May ’23,” the pundit wrote.
One potential reason for this shift has been the lingering distrust among speculators and investors following the FTX controversy. According to the pundit, the fallout from the FTX revelation as an actual Ponzi scheme has led to a “flight to safety” in the form of self-custody. As a result, many individuals have been opting for self-storage as the preferred method for long-term asset preservation.
“The message of “not your keys, not your coins” has simply been getting traction,” he added.
Furthermore, the analyst also pointed out a delay in new investors entering the market, whom he referred to as “tourists.” These individuals have yet to recognize the potential of the current upward market trend. According to him, these investors are unaware of the opportunities because they are not keeping up with the current market conditions. For this reason, he noted that it may take a few more weeks or even months for them to realize that the “bull market has basically been in its early phase since the FTX capitulation candle back in early Nov last year.”
That said, while the decline in exchange depositing transactions could indicate the early signs of a new bull market, Tomáš Hančar emphasized the need to consider other on-chain indicators. Notably, the overall network activity, the rising number of wallets, including the general downward trend of miners to exchange flow support this hypothesis.
Meanwhile, as the cryptocurrency market continues to evolve, investors’ growing inclination towards self-custody for assets such as Bitcoin demonstrates a desire for greater control and security and is positive for Bitcoin’s price.
At press time on Friday, Bitcoin was trading at $26,829, up 2.21% in the past 24 hours. In the past week, the cryptocurrency has lost a mere 1.56%, according to CoinMarketCap data.