Following its failure to hold the high of $66,520 recorded on Tuesday, Bitcoin (BTC) drifted lower on Monday, trading at around $64,750 price level. While the price move has spooked the bulls, two factors powering it are even more bearish than many expect.
Stablecoin netflow into Binance goes negative
According to exchange data collected on Monday, there has been a sharp reversal in stablecoin behavior over the past week. Notably, stablecoin netflow related to crypto exchange Binance has fallen into negative territory – down more than 315 percent compared to the 90-day baseline.
When stablecoins exit an exchange, it typically means that the so-called “dry powder” is being pulled out instead of being potentially deployed to buy digital assets. This is usually associated with weak short-term bullish conviction, despite the spot price being range-bound.
The second factor is the inflow of relatively young coins – aged 3-6 months – into Binance has climbed to an extreme reading. It has surged 1000 percent above a very low starting point.
In addition, the proportion of 1-3 months old BTC coins moving to exchanges has jumped by almost 208 percent compared to the quarterly average.
To explain, younger coins arriving on exchanges generally reflect recent buyers, not long-term holders repositioning – a group historically quicker to sell into weakness.
Meanwhile, Binance funding rates remain flat around the 0.00 to 0.01 level, meaning that leverage has little to do with the recent BTC price action. The Coinbase Premium has come down to -0.12, hinting that U.S. spot demand is cooling rather than stepping in.
For the uninitiated, the Coinbase Premium measures the price difference between Bitcoin on Coinbase and other major exchanges, especially Binance. A positive premium suggests stronger U.S. institutional buying demand, while a negative premium indicates weaker U.S. demand relative to global markets.
Bitcoin ETFs see positive momentum
In contrast to the stablecoin exodus from exchanges, the institutional demand for BTC remains firm. On Friday, The Coin Headlines reported that the demand for Bitcoin exchange-traded funds strengthened.
One instance of heightened Bitcoin ETF demand is the recent 7-day positive net inflows streak of BlackRock’s IBIT spot BTC ETF. Between July 14 and July 23, the fund had attracted funds worth approximately $710 million.
Bitcoin whales aren’t holding back either, as they continue to quietly accumulate despite the cryptocurrency’s lacklustre price performance.
