On-Chain Data Requires Additional Data

Increased Transparency

On-chain data is a very important data point when it comes to trading and investing in Crypto. When you consider that a public ledger enables so much transparency, especially when compared to traditional investment vehicles, it makes sense that investors will want to access this information. Crypto definitely has the highest level of transparency in the investing world due to this one particular aspect. However, all is not perfect and bad actors are always on the lookout for new ways to manipulate and leverage data to their advantage. With an increase in transparency also comes an increase in potential manipulation and deception.

Not A New Trend

Back in 2021, I mentioned how whales were performing deceptive moves on the blockchain to create illusions and ultimately trigger “false signals”. I have noticed that a number of bloggers and Cryptoneurs have been picking up on this trend of late but it is definitely nothing new. Moving coins onto exchanges with no intention of selling is a form of “spoofing” and causes the market to tremble every time it is picked up by whale watcher accounts on Crypto Twitter. Misinformation does not only occur via deceptive means but also in cases where data is isolated and not backed by additional confluence.

Have You Considered This?

Something that I have not heard anyone mention yet is the true motivation behind Crypto leaving exchanges. Traditionally, it is considered a bullish sign when coins leave exchanges, as it suggests holders are looking to hodl and not sell. In essence, supply is being removed from the “marketplace” but is that really the case at the current moment? Have you stopped to consider the effect of the recent collapse of many CeFi companies? A lot of noobs simply keep their coins on Binance and other CEXs but with the recent casualties, I am sure many noobs, as well as lazy investors, have promptly withdrawn their coins from exchanges. I am sure that those who are not actively trading have chosen to hold their own coins until such a time as they are ready to sell.

No matter how you look at it, there are investors pulling funds from exchanges. Coins that were simply just sitting there. So, in reality, coins leaving exchanges could return momentarily, as investors are simply reducing risk. Had the recent collapse not taken place, I believe many coins would still be lying idle on exchanges. You have to consider that the motivation here is not simply to hodl but to secure ownership.

Final Thoughts

When you consider that Bitcoin leaving exchanges is not even that high at the moment you are simultaneously able to perceive that the selling pressure is perhaps a lot stronger than isolated data would have you believe. Momentary pumps that we have seen of late have also been on the back of somewhat weak volume, which further serves to validate this idea. Whale wallets have also been reducing exposure in recent times. This creates even more confluence that the true weight still resides with the sellers and not the buyers. This is merely my interpretation of the data and should not be considered investment advice. See you again soon!

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