Another bearish signal for Bitcoin has been looming around the corner with the digital asset seeing the largest inflows from external wallets to spot exchanges last seen in March 2020, signifying investors are ready to sell-off their holdings.
Bitcoin Sees the Highest Daily Spike in Exchange Inflows
Having already lost over 50% of its value from its all-time high in just two months, numerous technical indicators are signaling Bitcoin towards even more adverse price reactions.
Following reports of the digital asset crossing the much-dreaded “death cross”, new on-chain data reveals that investors are depositing massive portions of their holdings to exchanges in order to cash out their holdings.
For instance, data from CryptoQuant shows that on June 21 Bitcoin saw the highest daily spike in inflows from external wallets to spot exchanges, last seen during the COVID-19 induced March 2020 crash, that took the cryptocurrency to as low as $3,000.
Even though the leading cryptocurrency has recovered more than $10,000 from the previous weeks, the digital asset has indeed weakened due to China’s brutal crypto crackdown.
Stablecoin Inflows Drop Considerably
At the same time, data from CryptoQuant indicates that the stablecoin inflows to exchanges seem to have dropped as investors turn bearish on Bitcoin.
For instance, during the first five months of the year, the circulating supply of stablecoins was on a steady rise and accelerated somewhat as the market sold off in May. However, stablecoin issuance came to a standstill at the beginning of June as bearish trends took over the Bitcoin market.
Since then, stablecoin inflows to exchanges have fallen to their lowest level last seen in October 2020.
Usually, stablecoin inflows are viewed as bullish catalysts. However, CryptoQuant’s recent newsletter warns of similar spikes in stablecoin issuance in the past followed by a prolonged price declines:
“After the bottom of the last bear market (2018-2019), we saw a steady rise in issuance events. At the top (June 28, 2019) of this bullish period, there was a large issuance event (the two big spikes in July-August 2019 are due to USDT ETH issuance). It looks like the same is happening right now.”