Investor emotion and behavior are assessed using exchange flow measures. Bitcoin inflows into exchanges are often the result of token holders cashing out winnings. On the other hand, outflows often refer to holders taking tokens off exchanges for long-term storage.

Both inflows and outflows of Bitcoin have drastically decreased from the November 2021 market highs, with inflows seeing the most severe drop, falling to multi-year lows.

The entire amount of Bitcoin moved to and from exchange wallets in USD is shown as exchange inflow and outflow. The data below indicates that since mid-2017, inflows have regularly outpaced outflows on a 30-day moving average. During a bull cycle, savvy money holders will transfer BTC to exchanges to pay out gains.

This gap has been most obvious after the November 2020 market high, with inflows greatly outperforming outflows, culminating in a June 2021 peak of about $6 billion.

However, inflows have significantly decreased after that high, mirroring covid collapse levels recorded in July 2020.

Heatmaps provide a breakdown of the total USD transfer volume sent to and withdrawn from exchanges.

The size of each transaction volume in USD is shown on the left y-axis. Each of the 100 volume buckets’ color indicates the number of transactions. Simultaneously, the right y-axis displays the Bitcoin price in USD on a logarithmic scale. Time is represented via the x-axis at the bottom.

The figure below shows a significant influx volume at the last bull cycle top in December 2017. This pattern also appeared during Bitcoin’s double peak, when its price reached $64,000 and $69,000 in March and November 2021, respectively.

Token outflows follow the same trend as inflows, with peak transaction counts in December 2017, March 2021, and November 2021.

When combined with earlier findings, this implies that short-term investors purchased Bitcoin extensively throughout both bull cycle peaks, whereas long-term investors sold at the top.