With Bitcoin Inflows Rising to $5.6B, Is This the Final Capitulation?

Key Insights:

• Bitcoin’s price fell by almost 12% on Monday, but is trying to maintain above the $30,000 mark.
• The market saw the most significant inflows to centralized exchanges totaling almost $5.6 billion.
• The Fear & Greed Index has dropped to the lowest signifying extreme market fear.

On Mat 9, bitcoin (BTC) saw one of its sharpest price fall of this year, pulling the top crypto asset down to as low as $29,730. This price loss marked the fifth consecutive day of sell-offs, as risk reduction from the global financial markets continued.

Bitcoin’s price was down by almost 50% from its November price high of $69,000. The top coin’s price tumbled by nearly 12% on Monday, ending the day at $30,077.

However, after an intense day of sell-offs, bitcoin’s price established the $30,000 level as psychological support. However, the crucial question remained whether this was the final capitulation or if there were more pullbacks to come?

Sell-offs triggered bitcoin inflows

A lot of investors abandoned the BTC ship, as the bitcoin price took a deep dive below the key support levels. A record-breaking $5.6 billion flowed into centralized exchanges as traders and investors were panic-stricken.

The May 9 exchange inflows were the most significant inflows to cryptocurrency exchanges in 2022, as the crypto market fell to July 2021 levels.

Data from Glassnode highlighted that traders transacted $5.6 billion in bitcoin from the tracklist of Glassnode on centralized cryptocurrency exchanges.

📊 Daily On-Chain Exchange Flow#Bitcoin $BTC
➡️ $5.6B in
⬅️ $3.9B out
📈 Net flow: +$1.7B#Ethereum $ETH
➡️ $1.3B in
⬅️ $1.2B out
📈 Net flow: +$15.3M#Tether (ERC20) $USDT
➡️ $1.2B in
⬅️ $1.8B out
📉 Net flow: -$544.4Mhttps://t.co/dk2HbGwhVw

— glassnode alerts (@glassnodealerts) May 10, 2022

That said, the Fear & Greed Index oscillated in extreme fear but hadn’t seen a score as low as 11 since February. Analysts on Twitter highlighted that the Fear & Greed Index falling to as low as 11 is very rare. Arrows on the chart below show the previous scores of 11 or lower.

More drops could be incoming

At the time of writing, BTC was attempting to keep prices above the $30,000 mark; in fact yesterday’s overselling induced a minor market recovery. BTC traded at $32,056.91, noting merely 3.12% daily losses and 16.75% weekly losses.

Even though bitcoin appears to be rebounding, it still faces strong resistance at $34,700, where over 668,000 addresses bought nearly 376,000 BTC.

These addresses may try to break even in the event of a bullish impulse, which could reject BTC and send it back down to $30,000.

That said, Crypto Quant analysts highlighted that there could be more to BTC’s capitulation. Firstly huge inflows were observed to exchanges while whales sent a lot of BTC and net flow (inflows-outflows) was positive – over 29,000 BTC on exchanges.

That said in the derivatives market, $248 million longs were liquidated while $59 million short liquidations took place. When yesterday’s liquidations were compared to the April correction or May 21 crash, we can see that there were 6x more liquidations than yesterday.

Finally, the bitcoin dominance chart presented that BTC dominance is on really low levels, and we haven’t finally capitulated on altcoins yet. Usually, when final capitulation comes, people exit from altcoins to bitcoin.

Despite the recent short-term gains by BTC the coin still didn’t seem to be on its way up. In fact, a sell-side pressure-induced pullback can bring the coin below the $30,000 mark.