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Bitcoin has had its most poorly performing week since 2018. At the time of writing it has fallen just over 2000$ since the weekly candle opened. However, price only tells us half the story.

People have been quick to put blame for price movements on the launch of the much anticipated Bakkt futures market, or potential drops in hashrate. But now courtesy of the TokenAnalyst we can get valuable data on how large players in the market are moving capital, and in doing so gain insight into their motivations.

When taking a look at the data we will primarily be focusing on both Binance and BitMEX as these were the two exchanges where the most activity took place.

BitMEX

Exchange In and Out Flows for BitMEX

When taking a look at the data for BitMEX we see the large dip in price on the price chart (Top graph) which took us from 9500 to 8500 in one hour. In the following 3 hours after this fall in price on the net in/out flow chart (Bottom Graph) we see just under 8000 Bitcoin deposited.

Binance

Exchange In and Out Flows for Binance

When we inspect the data for Binance we see strong similarities. A dump followed by large amounts of deposits in the proceeding hours. Not quite as much Bitcoin was deposited to Binance as Bitmex. Deposits coming in at 5765 Bitcoin. Nonetheless a very significant amount of Bitcoin.

Tether In and Out Flows for Binance

However, it is important to note that unlike BitMEX, Binance does not purely handle Bitcoin transactions but a multitude of currencies. An important one to Bitcoin is the stable coin Tether. Based on the chart above we can see a huge net outflow of Tether to the value of 35 Million Dollars. This contrasts heavily with the net inflow of Bitcoin to exchanges. We looked further into Tether withdrawal data and we saw similar trends across a number of exchanges. But now we have a dilemma, where is the Tether being sent? That question is currently unclear but whichever market players are harvesting these Tethers they have not deposited them on any other exchange except one. Poloniex, where 10 million were deposited. To put that in perspective Poloniex only does 10 million dollars in total volume a day.

Conclusion

To answer the question we gave at the start of the article. What is the motivation behind these large flows of capital? It is truly hard to know the full story, but one possible suggestion are large quantitative firms who engage in arbitrage where as they make money in price differences across exchanges. Read our article on Alameda Research to get more of an insight into how quantitative trading in crypto works. Another is miners in China whose energy costs have risen selling their Bitcoin for Tether. Nonetheless it is very interesting to see how blockchain is giving us a perspective into how financial markets work beyond just movements of price.