Bitcoin Inflow To Exchanges Remain Low, Will It Be Enough To Cushion Mt.Gox BTC Dump?

Bitcoin briefly shot over $70,000 yesterday before plunging below $69,000 to spot rates. While there are hints of weakness, one analyst on X notes that

Bitcoin price dropped sharply yesterday after failing to break past $72,000. BTC price plunged below the $69,000 level to reach spot rates of $68,9K. However, despite the sell-off, one analyst on X claims that the lack of user enthusiasm to sell is evident in the low exchange inflows.

Bitcoin Inflows To Exchanges Remain Low

The analyst highlights that exchange inflows are low at spot rates. On May 28, exchanges received only 25.9K BTC daily. According to historical exchange inflow data from CryptoQuant, the current inflow rate is comparable to 2016 levels.

After 2016, there was a significant uptick in momentum. However, since the beginning of the year, the inflow to exchanges has been decreasing. It’s worth noting that around this time, the United States Securities and Exchange Commission (SEC) approved nine spot Bitcoin exchange-traded funds (ETFs).

With this product available in the United States, some large whales may have chosen to convert their coins and hold ETFs instead. In doing so, they transferred custody to an approved custodian, depending on the spot Bitcoin ETF issuer they selected.

Mt. Gox Moving BTC: How Will Prices React If They Sell?

While the average BTC inflow to exchanges is at 2016 levels, this may change in the coming months. On May 28, Token Unlocks data shows that Mt. Gox, the defunct crypto exchange hacked in 2014, moved over $9.4 billion in BTC.

This unexpected transfer has sparked market concerns. Currently, the intention remains unclear. However, if they decide to liquidate on exchanges, the implications could be significant.

Despite this possibility, the analyst argues that BTC’s low average exchange inflow to exchanges would serve as a timely cushion. Should Mt.Gox creditors decide to sell, the analyst believes the market will easily absorb this sell-off despite increased initial volatility. In other words, the price impact will be minimal.

Before being hacked and losing over 800,000 BTC, Mt. Gox was a prominent Bitcoin exchange. At one point, it handled over 70% of all global BTC trading volume. Victims of the unfortunate hack will be compensated in the next few months.