Cryptocurrency Flow data on stock exchanges is one of the most used methods to determine the current market sentiment and the behavior of investors. According to new data shared by CryptoQuant, we are seeing an upside reversal that does not bode well for the bulls, but there is one detail to be aware of.
According to the trading volume and investment inflows to certain investment products, the spike in foreign currency inflows is mostly due to cryptocurrency derivatives rather than spot assets, which means that selling pressure will not come from regular selling transactions in the market.
Exchange Reserve Is increasing
“Inflow into the exchange is increasing, but this inflow is related to derivative market.”
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— CryptoQuant.com (@cryptoquant_com) September 5, 2022
According to the data, the interest in the market is too early to celebrate that the majority of investors are showing renewed interest in other cryptocurrencies, especially Bitcoin and Ethereum. The fact that the bears seem ready to fund additionally instead of closing their positions, increasing foreign currency inflows represent another data showing this trend.
To do this, some traders need to deposit additional funds and cover current losses to keep their positions afloat.
Institutional Entries in Crypto Assets Have a Similar Pattern
Digital asset investment products posted a relatively low $9.2 million inflow last week. However, according to CoinShares data, most of these funds are directed towards short-term investment products.
short bitcoin investment products saw nearly $20 million in inflows, raising total AuM to a record-breaking $158 million. The data shows that institutional investors mirror the behavior of retail traders and yet do not believe in the recovery of the cryptocurrency market.
At the time of writing, most digital assets were trading at a loss. Preparing for Merge update in less than 10 days Ethereum Bitcoin lost almost 1.5% of its value, while it lost a little less than 1%.
You can follow the current price action here.
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, Koinfinans and the author of this content cannot be held responsible for personal investment decisions.