Odaily Frontline | Bitcoin is flowing back into exchanges, but for altcoins?

This article comes fromDecrypt, original author: Robert Stevens

Odaily Translator |

Summary:

This article comes from

, original author: Robert Stevens

Odaily Translator |

Glassnode secondary titleSummary:

- More Bitcoin has flowed into exchanges this month than has flowed out.

- This bucks the 6-month-long trend since early 2020.- Is it a bearish signal? Analysts say traders may want to swap bitcoin for altcoins.The latest report data show

, for the first time since January this year, the amount of bitcoin flowing into crypto exchanges exceeded the amount flowing out.

By observing the data as of July 19, Glassnode found that the number of bitcoins flowing into the exchange exceeded the number of outflows this month, which deviated from the trend that lasted for nearly half a year for the first time. Since the beginning of the year, the number of bitcoins flowing out of the exchange has been higher than inflow.

said in a report in May

: "This is the largest and longest BTC exchange balance downtrend in Bitcoin history."

At the time, Glassnode saw it as a potentially bullish sign for Bitcoin. Investors could have “withdrawn their funds from exchanges and put them into cold storage, implying a longer-term outlook,” it argued. In this way, the opposite situation that is now emerging may be interpreted as a bearish signal, but analysts interviewed by Decrypt said that such a judgment cannot be made simply, and there are more factors behind it.

So, what exactly is reversing this trend? The answer given by analysts is: altcoins. That includes Dogecoin — which TikTok users and Elon Musk helped drive double-digit growth earlier this month.

Simon Peters, a market analyst at trading site eToro, said: "As talk of 'altcoin season' intensifies, BTC outflows from exchanges are now likely to return (and be converted into altcoins)."

image descriptionBitcoin net flow on crypto exchanges, source: Glassnode

Quantum Economics analyst Pedro Febrero agrees. “It seems like traders are moving from BTC to altcoins,” he explained, citing data from CoinMarketCap: Bitcoin’s share of market capitalization fell by about 3%, from 64% to 61%.

“It therefore makes sense that net bitcoin flows to exchanges are starting to surge again, as most investors and traders use exchanges to convert bitcoin to altcoins,” Febrero added.

Why turn to the altcoin market? Peters attributes this to the rise of DeFi tokens such as COMP, the governance token of Compound, a DeFi lending protocol. The token is currently listed on Coinbase.