Bitcoin (BTC) Flows Pointed to Bearish Conditions on Aug. 8, 2022

Bitcoin (BTC) exchange flows pointed to bearish conditions on Aug. 8, 2022, as a cumulative measure remained below its 90-day average and transfers still favored Coinbase over derivatives venues.

The gauge compared the one-year cumulative amount of Bitcoin moving from Coinbase to derivatives exchanges with a 90-day moving average. Crossings of that average had coincided with Bitcoin price turning points, including tops and bottoms, making the measure a possible marker of shifts in the market cycle.

The direction of transfers also shaped the gauge’s interpretation. Movement from Coinbase toward derivatives venues was associated with risk-on periods, when traders may use Bitcoin for leveraged trading or as collateral for other crypto positions. A flow back toward spot exchanges was treated as a risk-off sign.

That reverse flow can reflect plans to sell Bitcoin for fiat currency. Spot exchanges such as Coinbase can provide a route to convert holdings and move the proceeds to a bank account, while derivatives platforms typically are not used as off-ramps.

On Aug. 8, 2022, Bitcoin was still moving from derivatives exchanges toward Coinbase, and the cumulative measure remained below its 90-day average. The seven-day percentage-change reading for Coinbase-to-derivatives flows had mostly moved lower, reinforcing the bearish reading of the gauge at that time.