Chainalysis released its March 2020 BTC market report. Exchanges have seen a massive inflow of BTC since March 9, receiving nearly 319,000 of the cryptocurrency on March 13 alone, according to the blockchain and crypto-analytics company.
Nonetheless, from March 12-13 the average daily volume of Bitcoin was sent to exchanges for sale almost nine times, causing the price to fall to $3,000s. It was the largest daily drop for BTC in the last seven years.
Although crypto-inflow volumes remain high— twice the daily average — according to Chainalysis, BTC’s price appears to have stabilized for the moment.
“The majority of excess bitcoin arriving at exchanges has been sold, and the worst of the oversupply appears to be finished for now.”
Despite such a turbulent time the company gives some potential reasons for the price leveling out. While transactions between 10 and 1,000 BTC accounted for 70 per cent of the cryptocurrency flow through exchanges, Chainalysis says that the total amount of BTC was not sufficient to cause lasting damage:
“The majority of available bitcoin was not cashed out, suggesting that most bitcoiners are happy to hold. At 712,000 more than average, the amount of bitcoin sent to exchanges in the last eight days is unprecedented. But this extra 712,000 represents just 5% of available bitcoin (all mined bitcoin minus all lost bitcoin).”
Chainalysis Predicts Future Disruptions In Cryptocurrency Market
The future in all financial markets is unclear with retail stores closing down across the United States and more firms being pressured to let their employees operate from home. Global travel restrictions to counter coronavirus spread tend to change on a regular basis, with crypto activities worldwide postponed or cancelled.
Given this uncertainty, Chainalysis also aims to use the conventional Bitcoin tracking indicators:
“It’s hard to predict where the bitcoin market will go next. However, large increases in exchange inflows have proven to be a good indicator of increased volatility, so we recommend keeping an eye on the amount being transferred to exchanges. We also expect that professional traders will continue to drive events, as opposed to retail exchange users, simply because they are responsible for much larger volumes.”