One article to understand the capital flow before Bitcoin halving: trading funds decreased by 56,000 BTC, and the capital flows of large and retail investors were opposite

What changes have occurred in trading funds? Are the main players entering or leaving the market?

There are two days left before Bitcoin’s third halving, which is expected to take place on May 12.

As the halving approaches, the price of Bitcoin has risen rapidly and has now stabilized at the $9,000 mark. According to data from Huobi Global and OKEx, Bitcoin broke through $10,000 on the morning of the 8th, up 116.54% from the plunge on March 12 and up 12.77% from the six months before the halving.

In fact, Bitcoin has entered an upward channel since April. The price of the currency has shown an obvious upward trend, with the highest single-day increase of nearly 20% at one point, breaking through $9,400, which seems to have made the market see the possibility of the crazy "halving market" coming soon.

PAData analyzed exchange wallet data and market transaction data from April 1 to May 5 to observe the flow of funds in the market before the halving. What changes have occurred in trading funds? Have the transaction volumes of spot and contracts kept up with the pace of the rise in coin prices? Are the main players entering or leaving the market?

The overall market funds decreased by more than 56,000 BTC

The amount of BTC in exchange wallets is the most direct reflection of the amount of funds in the market. According to statistics, the total balance of various wallets of the 12 exchanges monitored by Chain.info on April 1 was about 2.4996 million BTC, and the total balance on May 5 was about 2.4430 million BTC, a decrease of more than 56,600 BTC. This means that although the price of Bitcoin has been rising significantly over the past month, the amount of Bitcoin in the entire trading market is decreasing.

From the perspective of various exchanges, the total balance of various wallets of Poloniex, Bitflyer, Gate.io, Binance and Bitfinex on May 5th decreased compared with April 1st. Bitfinex decreased the most, with a total decrease of 74,200 BTC, and Poloniex lost the least, with a total decrease of 429.36 BTC.

The wallet balances of seven exchanges, including OKEx, Huobi, Kraken, Coinbase, Bitstamp, Bittrex, and Coincheck, have all increased recently. Among them, OKEx has the largest increase, with a total increase of 81,400 BTC, followed by Huobi, with a total increase of 3,375.23 BTC, Kraken and Coinbase, with increases of 2,025.01 BTC and 1,224.82 BTC respectively.

The capital flows of large investors in most exchanges are opposite to those of retail investors

Since April, large deposits and withdrawals exceeding 50 BTC have been relatively active on exchanges.

From the perspective of large deposits (transactions that transfer money from any address to the deposit address of an exchange), 8 exchanges have recently had more than 100 large deposits. Among them, Binance has the most large deposits, reaching 1,017 times, equivalent to 29 times a day, and the cumulative large deposit amount exceeds 169,200 BTC. Secondly, Coinbase, OKEx and Huobi have also had more than 500 large deposits recently, and the cumulative deposit amount has exceeded 70,000 BTC.

From the perspective of large withdrawals (transactions from an exchange address to any address), 5 exchanges have recently made more than 100 large withdrawals. Among them, Binance is still the most active exchange for withdrawals, with a recent cumulative large withdrawal of 1,732 times, equivalent to 49 times a day, and a cumulative large withdrawal amount of more than 300,000 BTC. Secondly, OKEx, Coinbase, Huobi and Bitfinex have all made more than 300 large withdrawals, with a cumulative large withdrawal amount of more than 90,000 BTC.

If the difference between large deposits and large withdrawals is regarded as the exchange's large net inflow, then 11 of the 16 exchanges included in the statistics have shown large net outflows over the past month, including Binance's large net outflow of 132,800 BTC, Bitfinex, OKEx and Huobi's large net outflows of more than 40,000 BTC. Only 5 exchanges have shown large net inflows, including Coinbase's large net inflow of more than 28,600 BTC, and Kraken and Bitflyer's large net inflows of more than 10,000 BTC.

It is worth noting here that the large net inflows of the six exchanges, Binance, OKEx, Huobi, Bitstamp, Gate.io, and Poloniex, are much smaller than the changes in the total balance during the same period, which means that retail investors on these exchanges have made a large amount of deposits in the past month or so, making up for part of the gap in the outflow of funds from large investors.

The situation is the opposite for Bitfinex, Coincheck, Bittrex, Bitflyer, Kraken and Coinbase. The large net inflows of these six exchanges are greater than the changes in their balances during the statistical period, which indicates that retail investors in these exchanges have withdrawn more coins, increasing capital outflows.

From the perspective of the overall operation direction, when there is a large net inflow, if the difference in the total balance in the same period is larger, it means that the deposit and withdrawal direction of the large accounts of the exchange is consistent with that of the retail accounts (small traders), or vice versa, when there is a large net outflow, if the difference in the total balance in the same period is larger, it means that the direction is consistent. Only Bitfinex meets this situation. In other exchanges, the flow of funds of large accounts is opposite to that of retail accounts.

Large amounts of funds in the existing market mainly flow to Coinbase

Judging from the large transfers of more than 50 BTC between exchanges, Poloniex, Coincheck, Gate.io, Kraken, Bitstamp, Bitfinex, OKEX and Huobi all showed net outflows. Among them, Huobi's net outflow to other exchanges reached 38,300 BTC, and OKEx's net outflow to other exchanges reached 32,400 BTC. The net outflows of other exchanges that lost their existing markets were all less than 10,000 BTC.

In addition, Coinbase, Binance, Bitflyer, ZB, Bittrex, Bithumb and MXC have all shown net inflows in recent large transfers. Among them, Coinbase and Binance received 71,700 BTC and 12,400 BTC from other exchanges respectively. The net inflows of other exchanges were all below 3,000 BTC, and MXC, which had the least, only received 165 BTC from the existing market.

As PAData has observed before, Binance, Huobi, Coinbase and OKEx are still the mainstream exchanges in the entire BTC trading market, and the capital network between exchanges mainly revolves around these four exchanges. Since April, the largest number of large-scale transactions has been transferred from Binance to Coinbase, with a cumulative number of 178 transactions and a cumulative amount of 36,500 BTC. The same relationship also exists between OKEx and Coinbase and Huobi and Binance. The cumulative large-scale transfer amounts on these two routes have also exceeded 30,000 BTC.

The four routes from Bitstamp to Binance, OKEx to Binance, Huobi to OKEx, and Binance to OKEx are secondary routes in the recent Bitcoin funding network, and the cumulative large transfer amounts have exceeded 10,000 BTC.

However, exchanges that are in a marginal position in the network, such as ZB, MXC, BTC.top, Bithumb, Poloniex, Coincheck, etc., have fewer large-value transfers with other exchanges, which means that it is difficult for these exchanges to "poach" existing large users from mainstream exchanges.

The transaction volume of large spot orders has not shown an upward trend

Buy orders account for an average of 53%

Since April, although Bitcoin has entered a clear upward channel, the price once exceeded $9,400 and has stabilized above the integer mark of $9,000. It has risen by nearly 90% since the plunge on March 12, and by about 7% compared with the six months before the halving. However, while the price of the currency has risen, the transaction volume of large spot orders (referring to a single transaction of more than $100,000) has not risen steadily, but has shown an overall downward trend.

According to statistics from Hetongdi, as of 12:00 noon on April 1, the transaction volume of large spot orders of Bitcoin was about 39.86 million US dollars. As of 12:00 noon on May 3, the transaction volume of large spot orders was about 48.56 million US dollars, a moderate increase of 21.83%. During this period, the transaction volume of large spot orders suddenly increased on April 7, reaching 155 million US dollars, with an intraday increase of 177.87%. In addition, the transaction volume of large spot orders also increased significantly on April 30 and May 1. However, after the two increases, the transaction volume of large orders immediately fell.

From the overall trend, the transaction volume of large spot orders has been on a downward trend since April, which is opposite to the rising trend of the currency price. This points to two possibilities. One is that the rising momentum of Bitcoin since April mainly comes from small traders, and large traders are holding coins waiting for further price changes. The other is that the volume and price behind the rise in the currency price this time are inconsistent, which may contain higher risks.

The transaction volume can only reflect the overall trading activity, but cannot reflect the specific flow of funds. To determine the specific flow of market funds, it is also necessary to observe the proportion of buy orders and sell orders.

According to statistics, from April 1 to May 3, there were 17 days (33 days in total) when the buy orders accounted for more than 50% (including 50%) of the large order turnover on that day. Overall, the recent average daily buy order amount accounted for about 53%, which is dominant, which means that the main operation direction of large orders in the spot market recently is buying, which may provide impetus for the recent rise.

The transaction volume of large contracts increased, and the average share of sell orders was 51%.

According to statistics, the turnover of large Bitcoin contract orders (a single transaction of more than $500,000) has been on a mild upward trend since April. As of 12:00 noon on April 1, the turnover of large Bitcoin contract orders was about $17.84 million, and at 12:00 noon on May 3, the turnover of large contract orders was about $111 million, an increase of about 521.41%. During this period, like the spot, the turnover of large contract orders on April 30 and May 1 suddenly increased, reaching $290 million on May 1, but then the turnover of large orders fell back to above the average level.

From the perspective of the proportion of buy orders and sell orders, there were 20 days from April 1 to May 3 when the amount of large sell orders accounted for more than 50% of the large order transaction amount on that day. Overall, the average daily sell order amount accounted for about 51% recently, which means that the main operation direction of large orders in the futures market recently is selling.

The open interest of Bitcoin contracts has also been rising moderately recently. On April 1, the open interest of Bitcoin contracts on the entire network was about 1.304 billion US dollars. On May 5, the open interest had risen to 1.684 billion US dollars, an increase of 29.14%. But what is interesting is that on April 30 and May 1, when the large order volume of spot and contract transactions increased, the open interest of contracts did not change dramatically, and was only slightly higher than the recent average level.

However, the contract market has not recovered after the bloodbath on March 12. According to earlier statistics from PAData, the total Bitcoin contract holdings on March 10 were as high as $2.2 billion, but since April, the total contract holdings have not exceeded $2 billion.

The open interest of the four major contract markets has been on an upward trend since April. As of May 5, OKEx's Bitcoin contract open interest was approximately US$555 million, surpassing BitMEX to become the market with the largest open interest.

Judging from the growth in the past month, Binance is the market with the largest increase in open interest, with its open interest rising from $179 million on April 1 to $309 million on May 5, an increase of 72.63%. Secondly, Huobi and OKEx also saw a relatively obvious increase, with the contract open interest of the two markets rising by 38.98% and 29.07% respectively during the same period. BitMEX had the smallest increase during the same period, only 6.99%. However, compared with the data on March 10, except for Binance, the current contract open interest of the other three exchanges is still lower than the level before the crash.

It can be seen that the liquidity damage caused by the plunge may take a longer time to recover. At least the short-term "halving" benefit cannot stimulate the market to recover quickly.