Bitcoin (BTC) embarked on a robust rally Aug. 29 in response to a U.S. court's verdict that the U.S. Securities and Exchange Commission erred in rejecting crypto asset manager Grayscale's bid to transform its bitcoin trust into an exchange-traded fund (ETF), with the court deeming the decision as "arbitrary and capricious," according to a Coin Desk report.
"The amount of bitcoin available on exchanges increased significantly just before Grayscale's victory against the SEC. It's quite evident that certain influential entities were aware of the anticipated rise in crypto market capitalization resulting from this ruling," Santiment said in a post on X, formerly Twitter, Coin Desk reported, echoing the sentiment of on-chain analyst Ali Martinez.
Preceding this crucial ruling, approximately 30,000 BTC, valued at $822 million based on the current market price of $27,400, were transferred to addresses linked to centralized exchanges, according to data compiled by analytics company Santiment, Coin Desk reported. This ruling subsequently led to a 6% surge in bitcoin prices, propelling the primary cryptocurrency to $28,000.
It's conceivable some traders anticipated this price surge and took preemptive measures by shifting their coins to exchanges. Typically, investors move coins to exchanges when considering liquidating holdings or utilizing their coins as collateral for derivative trading, according to Coin Desk. Consequently, an upswing in exchange inflows often serves as a potential indicator of upcoming price volatility.
Interpreting metrics tied to addresses on the blockchain can be complicated due to labeling challenges, which can make drawing definitive conclusions challenging. According to data from South Korea-based CryptoQuant, the average inflow or quantity of BTC transferred per transaction to exchanges rose to 1.146, marking the highest level since June 21, corresponding with the price surge to $28,000, Coin Desk reported.
An elevation in the average inflow suggests investors are sending a considerable number of coins in a single transaction, possibly indicative of potential selling pressure. Nonetheless, this might not necessarily be the case this time, as average outflows also surged to their highest point in two months, and the net balance held on exchanges, especially those providing spot trading services, decreased, Coin Desk's report said.
