Declining Coinbase Inflows for Bitcoin and Ethereum as Binance Maintains Activity Levels

As the year wraps up, Bitcoin appears set to finish in the red, raising concerns among analysts regarding a possible upcoming bear market. Coinciding with this trend, there has been a drop in inflows for Bitcoin and Ethereum on Coinbase, while activity on Binance remains relatively stable. This article explores the recent trends in cryptocurrency exchange inflows, market liquidity, and Bitcoin's performance against key technical levels.

Key Takeaways

Bitcoin's price is experiencing a downturn, leading to speculation about a bear market.
Recent data shows significant inflows on Coinbase for Bitcoin and Ethereum, but these have sharply decreased.
While Coinbase inflows fell over 60%, Binance's inflows were less impacted.
Bitcoin's price remains range-bound, facing resistance below crucial moving averages.

Market Activity and Exchange Inflows

Bitcoin is poised to close the year negatively, leading to increasing concern among analysts about a possible bear market ahead. After failing to maintain momentum above important psychological and technical levels, investor sentiment has become cautious, with a focus on liquidity trends and exchange inflows as possible indicators of market shifts.

Recent analysis by Arab Chain, using the 7-day cumulative inflow data from CryptoQuant, reveals a significant difference in liquidity patterns across major cryptocurrency exchanges. The findings highlight both Bitcoin and Ethereum inflows, providing insight into the risk appetite associated with these prominent cryptocurrencies.

On November 24, Bitcoin was trading around $88,438, and during that time, Coinbase recorded approximately $21.0 billion in inflows over the past week. In contrast, Binance reported slightly lower inflows at around $15.3 billion. Interestingly, these high inflows occurred while prices remained significantly below previous peak levels. Rather than indicating aggressive buying, this data suggests a rise in exchange activity linked to portfolio adjustments, hedging strategies, or preparations for potential asset distribution.

Signs of Liquidity Tightening Amidst Stable Prices

By December 21, Bitcoin's price hovered near $88,635, marking only a slight increase since late November and remaining in a tight consolidation range. This static price movement was accompanied by exchange flow data indicating a significant shift in market conditions. On-chain metrics showed a sudden drop in liquidity entering primary trading platforms over a few weeks, signaling a decrease in overall market activity.

Bitcoin and Ethereum Exchange Inflow Value | Source: CryptoQuant

Coinbase, often serving as a barometer for institutional and U.S.-based flows, saw its seven-day cumulative inflows plunge to around $7.8 billion, reflecting a drastic drop of more than 60% when compared to late November levels. On the other hand, Binance also recorded a decrease in inflows, but it was less severe, totaling about $10.3 billion during the same time frame. Consequently, Binance ultimately surpassed Coinbase in net inflows for December, reversing the trend seen earlier.

This discrepancy indicates that while overall liquidity is tightening, trading operations are becoming concentrated in exchanges favoring short-term positioning and risk management. Simultaneously, the lack of significant price movement underscores how Bitcoin remains stagnant even as new capital inflows diminish.

In summary, the data shows a market characterized by lower activity levels and diminished urgency on both purchasing and selling fronts. Bitcoin's capacity to stay within a tight range, despite declining inflows, suggests a more subdued liquidity climate compared to just a month prior.

Bitcoin's Technical Outlook: Weaker Trends and Moving Averages

Currently, Bitcoin trades near $87,900 on the daily chart, continuing a correction that started after an unsuccessful breakout attempt above $120,000 earlier in the quarter. The current price structure reveals a definitive change in short-term trend dynamics, with Bitcoin trading firmly below its significant daily moving averages. Notably, it has lost its 111-day and 200-day simple moving averages, which have now begun to shift from support to resistance levels.

BTC testing critical demand level | Source: BTCUSDT chart on TradingView

The rejection from the $110,000–$115,000 area created a notable lower high, followed by a sharp sell-off that pushed prices into the mid-$80,000 range. Since this decline, the price action has entered into a tight consolidation, suggesting a period of stabilization but not necessarily confirming a market reversal. However, the inability to regain the declining moving averages indicates that any attempts at an upward trend are fragile.

Trading volume behavior further contributes to a cautious outlook. Selling pressure expanded during the initial drop, while subsequent rebounds occurred with limited volume, reflecting little confidence among buyers. This imbalance hints that while there is some demand for buying on dips, it is not robust enough to create a trend reversal.

From a technical standpoint, the $85,000–$88,000 region is viewed as a crucial near-term support area. Maintaining this level could allow for a range development. Conversely, failing to hold above this zone increases the risk of a deeper price decline. For sentiment to turn positive, Bitcoin would need to reclaim the $95,000–$100,000 threshold and stabilize above its key daily moving averages.

Featured image from ChatGPT, chart from TradingView.com.