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- Bitcoin exchange inflows and net flows indicate investor confidence, with the 14-day SMA of BTC’s net flow at a negative 7,210 BTC, the lowest in nearly three years.
- Bitcoin now shows a strong correlation with the S&P 500 and gold, both of which hit record highs amid expectations of a Fed rate cut.
Bitcoin price has recently rallied to an all-time high of $126,000, extending its weekly gains to more than 11%. This recent rally comes amid strong on-chain activity as BTC exchange reserves drop to multi-year lows. Market analysts believe that this could fuel the rally further moving ahead.
Bitcoin Exchange Reserves and Exchange Flows On A Steep Decline
As per the blockchain analytics firm CryptoQuant, the Bitcoin exchange reserves have tanked to 2.4 million, the lowest levels in the past six years. Historically, periods of reduced liquidity have often amplified upside potential, particularly when paired with steady accumulation trends.
At the same time, exchange inflows have declined significantly, falling from an average of 0.55 to 0.48 as Bitcoin’s price rose from $108K to $124K. This trend indicates that the market is being supported by genuine accumulation.
A key indicator of market confidence is Bitcoin’s exchange net flow, which tracks the difference between coins entering and leaving centralized exchanges. A negative net flow suggests that more BTC is being withdrawn than deposited, signaling that holders are opting to store rather than sell.
As of October 4, Bitcoin’s 14-day Simple Moving Average (SMA) for net flow stood at –7,210 BTC, marking its lowest level in nearly three years. The last time net flows reached such depths was in November 2022, just before Bitcoin surged from $16,000 to over $72,000 in the following months.
BTC Enters Strong Correlation With S&P 500 and Gold
Following the recent Bitcoin price rally to an all-time high of $126,000, blockchain analytics firm Santiment reported that the milestone comes amid broader market strength. Furthermore, BTC is showing a strong correlation with the S&P 500 and Gold, as both hit fresh all-time highs this week.
Bitcoin price has already rallied more than 10% since the US shutdown last week. Moreover, the S&P 500 and US equities have also rallied during the same period. Investor optimism is being fueled by expectations of a potential Federal Reserve rate cut later this month. On the other hand, confidence in the US Dollar is at a multi-decade low at this stage.
As reported by CNF, Bitcoin price has retraced to $124,000 after hitting an all-time high yesterday. On-chain analytics firm Glassnode reported that Bitcoin’s cost basis distribution indicates limited support between the $121,000 and $120,000 levels. A major support cluster lies near $117,000, where approximately 190,000 BTC were last accumulated..
