Bitcoin markets have taken a breather over the past week or so. However, some on-chain metrics continue to signal that recovery is occurring and the bears are weakening.
Glassnode’s “Week on Chain” report on March 28 showed that net exchange flows ticked higher by approximately 4,180 BTC last week. It added that this is the largest net increase since LUNA collapsed in May 2022.
Net exchange inflows have been positive for most of this year. This follows a massive exodus of crypto assets from centralized exchanges in Q4 2022 in the wake of the FTX meltdown.“Prior instances with similar or larger net inflows over the last cycle, have all aligned with major market volatility events, usually to the downside,” Glassnode noted.
The recent positive flows to exchanges are an indication that some profit-taking is occurring. “This suggests a degree of profit taking is underway, as investors take chips off the table.”
The analysts added that 65% of the weekly flow was from short-term holders. Long-term holders accounted for just 7.5% of the total deposit volume, it noted.
Last week has been the largest net profit taking since May 2022, when the Terra ecosystem collapsed. On March 23, BTC hit a 2023 high of $28,792 but has retreated since then.
However, Glassnode did observe that the magnitude of realized profits still remains well below typical bull market levels.
Overall, markets appear to have moved out of full bear territory but have yet to enter a bull phase. “This reinforces our observations from last week that the market appears to have returned to a more neutral gear, and resembles a more transitional market structure.”
Furthermore, realized profit momentum appears to have shifted into a positive structure. This is indicative of a transition phase where markets switch from bear to bull. However, the price does not move in a straight line, so there could still be more downsides to come.
Bitcoin prices are on the way to recovering this week’s losses caused by the CFTC Binance lawsuit. BTC tanked to an intraday low of $26,700 on March 28, but it has since recovered to hit $27,600 during the morning of March 29.