Bitcoin deposits on Binance, the world’s largest cryptocurrency exchange, have surged to their highest levels in recent months.
This triggers an analysis that suggests a potential rise in selling pressure for the leading digital asset.
Possible Reasons: Funds Poised for Sell-Off
CryptoOnchain, a CryptoQuant analyst, reported Friday that rising Bitcoin exchange balances point to three possible scenarios.
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The analyst outlined three possibilities for the swelling reserves: imminent sell-off, margin trading collateral, or institutional portfolio rebalancing. Of these, the analyst noted that the “funds pending sale” scenario appears most aligned with the current market conditions.
CryptoOnchain highlighted the historical precedent for such movements. “Historically, notable inflow spikes — when not matched by strong buying demand — have frequently preceded periods of short-term selling pressure,” the analyst wrote.
BTC Inflows Are Surging While Outflows Are Declining
The concern is compounded by data showing that withdrawals are not counteracting the increase in deposits.
“The recent rise in positive netflow (inflows exceeding outflows) further reinforces this signal, confirming that the total BTC balance on Binance is increasing rather than offset by withdrawals,” CryptoOnchain added. This indicates that the amount of Bitcoin leaving the exchange has also decreased, amplifying the net increase in its reserves.
This supply and demand imbalance could lead to increased market turbulence. “Without equivalent demand, this setup can tilt the market toward short-term downside volatility,” CryptoOnchain stated, “especially if large holders are positioning for sales or hedging exposure through derivatives.”
Bitcoin’s price fell about 4% Thursday night, sliding from $121,000 to $117,000 after July’s US PPI release. This decline was twice as steep as that of Ethereum (ETH) during the same period.
It is unusual for the world’s largest cryptocurrency to exhibit more than double the volatility of the second-largest cryptocurrency, even in response to bearish news that negatively impacts market liquidity.
source : https://beincrypto.com