Data Onchain is data that can be retrieved directly from the blockchain, which generally shows the natural movement of the crypto market.
Generally, analysts use this data to predict market direction, especially for Bitcoin, which has complete data.
One of the data that can be used is Outflow and Bitcoin Inflow data which are generally related to crypto trading exchanges.
This article will explain how to read the Bitcoin Outflow and Inflow amounts to understand market conditions better.
Bitcoin Outflow and Inflow
Bitcoin Outflow and Bitcoin Inflow are two different pieces of data that are useful for showing the amount of Bitcoin moving to or from an exchange.
Generally, the name of the data is juxtaposed with the word Exchange because it shows the amount of Bitcoin that moves between wallets that are not tied to exchange.
Bitcoin Inflow is data that reflects the amount of Bitcoin coming in from a wallet, such as a cold wallet, for example, Ledger, to the exchange.
In contrast, Bitcoin Outflow shows the amount of Bitcoin leaving the exchange and moving to a wallet that is not tied to an exchange.
This data is essential because it differs from small retail investors; generally, large retail investors or institutions use wallets that are not tied to an exchange.
So wallet is used only to store crypto, which in this case only stores Bitcoin.
To sell it, the investor must move Bitcoin from the wallet to the exchange, and only then can he sell it on the exchange.
Therefore, Bitcoin Inflow and Outflow data are essential data to help understand the movements of big investors.
Bitcoin Inflow is generally a bad sign because when there is an Inflow, it means that usually selling pressure will increase.
On the other hand, when a Bitcoin outflow occurs, it is generally a good sign because it indicates the potential for reduced selling pressure.
The analysis is not the primary data analysis but the analysis that can be combined with other data analyses. But in general, this data is a fundamental analysis of on-chain data to understand the market.
Current Data Condition
Currently, Bitcoin Outflow and Inflow conditions show fluctuating conditions where many Bitcoins are moving.
However, the current condition is more dominant in Bitcoin Outflow compared to Bitcoin Inflow from most international exchanges.
If seen, currently, Bitcoin Inflow is moving up but still at a relatively low number, which is below 50,000 Bitcoin.
This figure, although seen in an upward movement at the moment, is still relatively low compared to Bitcoin Outflow.
If you look at the data, Bitcoin Outflow is currently experiencing an increase, but the increase is quite significant.
It can be seen that currently, Bitcoin Outflow is in the area of 50,000 Bitcoin to 75,000 Bitcoin, with a peak of almost reaching 125,000 Bitcoin in early August 2021.
The current Outflow figure is more than Inflow, indicating that more Bitcoin is going out than entering the exchange.
The sign is that there is currently less potential selling pressure to support the currency appreciation.
Although the correlation is not perfect, these Bitcoin Outflow and Inflow figures can provide insight into market movements.
So investors need to deepen this data to start analyzing with on-chain data as a whole.
The purpose of on-chain data is not to be easily fooled by fake news or negative sentiments that are just FUD.
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