Bitcoin on the exchanges is rising fast, a sign of a possible correction?

In recent weeks, the volume of bitcoins held on major CEXs has grown significantly, reaching its fastest pace since May, according to recent data. This trend could signal a slowdown in BTC’s latest bull rally.

A major influx into exchange portfolios

According to Glassnode, a company specializing in blockchain analysis, the net balance of bitcoins held on exchange platforms increased by 31,382 BTC ($1.16 billion) on November 19. This is the strongest monthly growth since May 11.

In total, there are now nearly 2.35 million BTC stored on exchange platforms such as Binance or Coinbase. Such an influx is generally perceived by experts as a sign that some investors may be looking to liquidate their positions.

This trend comes despite bitcoin’s positive rally in October (+28%) and continued gains in early November (+7.5%). The recent election victory of Javier Milei in Argentina, a fervent supporter of Bitcoin, even spiked to $37,517 on the evening of November 19.

Towards a price lull?

Although this influx may also reflect renewed confidence in exchange platforms after the bankruptcy of FTX, comparable historical periods were frequently followed by a downturn or stagnation of Bitcoin.

Indeed, a rise in stock market deposits increases the risk of selling pressure if some holders decide to take their profits and liquidate their bitcoins. Especially as the current period of rapid gains seems conducive to decision-making.

What’s more, some of these additional bitcoins could also be used as collateral on derivatives markets such as BTC futures or options, leading to an increase in short selling and a further decline.

Conclusion

Although it’s still too early to speak of a bearish reversal, this rapid influx of BTC into the portfolios of centralized exchanges could herald a temporary slowdown in the bullish rally of recent weeks.

The next few days will tell us whether investors will indeed allow their gains to materialize, or whether this is just a temporary movement. Either way, for seasoned traders, this is a signal to watch closely.