The neutralization of funding rates in crypto perpetual markets following the drawdown suggested that the correction was healthy and that volatility may eventually decline.
With the Bitcoin halving a few days away, the amount of BTC leaving centralized exchanges has risen to levels not seen for more than 15 months. At the same time, the number of BTC that have not moved in over a year has declined significantly.
According to the Bitfinex Alpha report, these on-chain activities come as Bitcoin recovers from a two-day plunge that triggered a massive liquidation cascade over the weekend.
BTC Exchange Outflows Surge
The net amount of BTC that exited exchanges on April 12 was the highest seen since January 2023. Bitfinex analysts found that investors transferred 6,767 BTC on Friday, signaling a large movement to cold storage in anticipation of potential price rises after the halving. Conversely, the decline in one-year-plus inactive supply suggests that the market is at a point of inflection.
In the last month, long-term holders (those holding their BTC for more than 155 days) have been selling their assets at roughly 16,800 BTC daily. Analysts have discovered a similarity between the actions of BTC holders currently and in December 2020, shortly before the market recorded a major pump.
Bitfinex said this trend is often a precursor to a market downturn and usually lasts about seven months. The pattern suggests this cycle may experience a similar growth phase and that the market may be six months away from the BTC peak. However, this cycle may differ as prices have risen, with BTC recording a new all-time high before the halving.
Notably, long-term holder supply gradually falls before BTC reaches its peak.
Bitcoin Recovers From Weekend Bloodbath
At the time of writing, BTC hovered around $63,000, slightly up from its weekend bottom of $61,200. The market saw liquidations of more than $1.8 billion in long and short positions between Friday and Saturday as it reacted to Iran’s launch of drones and missiles against Israel.
However, the neutralization of funding rates in crypto perpetual markets following the drawdown suggested that the correction was healthy and that volatility may eventually reduce. Bitfinex said Bitcoin’s rebound to the $65,000 level afterward indicated that the market took the sell-down in its stride.
