If you have been in crypto for more than 3 months then you must have seen messages like these:
Alerts that indicate the flow of crypto to and from exchanges are very common across Twitter and telegram but what does it really mean? Let us take a look.
INFLOW:
Exchange Inflow or Crypto being transferred to exchange indicates an upcoming sell pressure is building and is generally a bearish sign. But Why?
As the concentration of crypto in an exchange increases there is a higher chance that the crypto was transferred to sell off and get out of the position by transferring it into exchanges. But this is not always the case, there are instances when the price actually went up on higher exchange inflows and was just a way to get paper hands to sell.
So be careful when taking these messages into consideration, manipulation in the market is never out of the picture!
OUTFLOWS:
Outflows or withdrawal from exchanges is usually a bullish signal as it means crypto is flowing out of the exchange for safe keeping for a longer period of time that is chances of it selling is low. This creates a supply shock in exchanges and drives the price up. Again like the inflows these can also be manipulated so do not use this as an indicator to enter a trade just a nice to have.