According to CryptoQuant analyst Axel Adler Jr, Bitcoin's Exchange Flow Multiple (30D/365D)—an indicator measuring the ratio of short-term to long-term BTC inflows and outflows on exchanges—is nearing its lowest point of the year. This decline suggests reduced exchange activity, possibly hinting at accumulation by investors.
When the Exchange Flow Multiple is low, it indicates that short-term trading volume is significantly lower compared to long-term movements, reflecting a period of reduced volatility. Historically, such patterns have appeared during accumulation phases, which typically precede bull market rallies.
There are two main reasons for the current low levels:
Long-term Holders (HODLers) Retaining Assets: Long-term investors are holding onto their Bitcoin, decreasing the volume of active trades. This is typical of the early stages of a bull market when experienced participants opt not to exit, expecting further price gains.
Market Recovery: After a correction, markets need time to stabilize, leading to lower activity on exchanges. The current low Exchange Flow Multiple could indicate that active traders are waiting for Bitcoin's price to find stability before returning to more active trading.
Given the similarities between the current levels of the Exchange Flow Multiple and those seen before the rally in 2023, this indicator suggests that the market may be preparing for the next upward trend.
