Since March 10, 2025, the net flow of Bitcoin—the balance between BTC moving into exchanges and those moving out—has turned negative.
This means that on average 3,600 more BTC per day are being taken out of exchanges than are being put into them. Analysts often consider this to be a signal that’s bullish—indicative of greater confidence among BTC holders than there is among BTC non-holders in the longer-term prospects for Bitcoin.
Yet the market is more complex, and the situation is more delicate, especially for short-term BTC holders. As it now stands, that’s an unenviable group of people.
Contents
Understanding Netflow: Why Negative is Bullish
Netflow gauges the flow of Bitcoin in and out of exchanges. When the flow of Bitcoin to exchanges is increasing, while the flow of Bitcoin to offline storage is not, then the Bitcoin economy is more likely to be in an increasing selling-pressure situation.
Gauging netflow is straightforward. You just measure deposits against withdrawals. They have an explicit Bitcoin money supply implication, which is essentially “You cannot sell what you do not have.”
The current net outflow of about -3,600 BTC daily is a significant shift from the prior months and quarters. To put things into context, the peak net outflow in this cycle happened back in December 2022, when a whopping 12,100 BTC per day were moving onto exchanges. Ever since then, this net outflow number has dropped quite a bit, and we now find ourselves in a sustained period of negative net outflow.
This movement reflects a change in trader psychology. Instead of offloading their BTC, investors seem to be accumulating or at least holding, which is often viewed as a positive precursor for price appreciation.
Starting March 10, 2025, the average Netflow (the difference between BTC deposits to exchanges for selling and BTC withdrawals from exchanges, which count as buying) has moved into negative territory (highlighted in green).
In other words, every day about 3.6K more BTC is being… pic.twitter.com/Pfrc8g803r
— Axel 💎🙌 Adler Jr (@AxelAdlerJr) June 3, 2025
The less BTC available on exchanges, the less immediate selling pressure there is, and that’s something that can help stabilize or even boost Bitcoin’s price in the medium to long term.
Short-Term Holders Face Challenges: Underwater and Vulnerable
In spite of the good netflow data, traders who have held Bitcoin for less than one month are experiencing losses. Their average purchase price for Bitcoin is almost $104,700, which is a lot higher than the current trading price for the cryptocurrency. Traders in this situation are said to be “underwater,” meaning they are holding onto an asset that is worth a lot less than they paid for it.
Short-term $BTC holders (less than a month in) are underwater – average entry was around $104.7K.
Now they’re sitting in red, and Realized Price has dropped below zero again.
If BTC doesn’t bounce soon, it could trigger some panic selling. This is a zone to watch closely. pic.twitter.com/tsGvaompMw
— Kyledoops (@kyledoops) June 2, 2025
This unfavorable sentiment is more amply underscored by the metric known as the realized price, which recently dropped below zero again for this group. The realized price signifies the average price at which coins were last moved on-chain and serves well as a proxy for the average cost basis of the current holders. For the holders of a short duration, a realized price that is now below the market price signifies that a whole lot of them are in a position of loss.
This situation can be a dangerous one. For short-term holders, an extended amount of time spent in an underwater position may lead to panic selling if the price does not quickly recover. And if those doing the selling are in a panic, that can certainly put added downward pressure on the price. And by “downward pressure,” I do mean the potential for a price decline or correction.
Market analysts closely monitor this situation because they know that short-term holders are the price movers. When the price is going up—say you have token price at 2.5x—that’s when short-term holders are coming in. And when the price is going down, and you have a 75% down from the peak, that’s when your short-term holders are going out.
The Road Ahead: Key Levels and Market Sentiment
Even though the netflow continues to be negative, we see the holders of Bitcoin as a cautious but optimistic crowd. These are people who aren’t too worried about being off of exchanges and don’t feel that they need to keep their Bitcoin on exchange to feel safe. In fact, this trend combined with an on-exchange supply that is historically low bodes well for the medium-term outlook.
The present pressure on short-term holders highlights a fragile equilibrium that the market is maintaining. For Bitcoin, now is the time to find support and perform a bounce-back. If it doesn’t, and if it rather continues the drift of the past week or so, then the risk of a very negative feedback loop that could lead to a further fall in prices looms. That’s because the market seems to be just one more significant price drop away from a look of panic setting in—pushing more holders to do the opposite of what Bitcoin’s name suggests.
Bitcoin’s next move might be forecast from an accounting of netflow and the realized price metrics. A continuing negative netflow trend, when prices are stable or improving, could signal the early stages of a healthier, more sustained rally.
On the other hand, not maintaining essential support zones could indicate a more difficult stretch coming up, necessitating that investors prepare for heightened volatility and possible price drops.
Conclusion
Since early March 2025, Bitcoin’s netflow has shifted into negative territory. By contrast, the netflow was positive for much of 2024. In a nutshell, netflow measures whether an asset is coming in or going out of an exchange. In Bitcoin’s case, more currency is moving off exchanges. That’s typically a good sign—much better than the reverse, which is what happened in the last part of 2022 and the first part of 2023, when more Bitcoin was on the way into exchanges. Increased confidence among holders from either of these two scenarios leads to diminished selling pressure. Yet, there are two challenges to this scenario being as rosy as it sounds.
The market is moving through this complex scene, and investors and traders are watching closely for any signs of price stabilization or further declines. The next few weeks could be critical in determining whether Bitcoin resumes its trajectory upward or faces renewed selling pressure that looks more like panic than reason.
Remaining vigilant with respect to the netflow trends, the realized price data, and the short-term holder behavior of Bitcoin will be pivotal to comprehending the cryptocurrency’s trajectory through 2025.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.
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