Bitcoin reserves on exchanges continue climbing amidst rising inflows, is this a sell signal?

Bitcoin exchange inflow hit a three-month high, indicating a rise of BTC reserves on cryptocurrency exchange platforms. Typically, a spike in BTC reserves is considered indicative of rising selling pressure on the asset. 

Also read: Will Bitcoin emerge as a safe haven with new found divergence between BTC price action and equities?

Bitcoin on-chain metrics indicate increase in selling pressure on BTC

Bitcoin inflow to cryptocurrency exchange platforms has climbed consistently over the past week. Based on data from crypto intelligence tracker Glassnode, BTC exchange inflow hit a three-month peak of 2,237 Bitcoin. 

BTC Exchange Inflow Volume (Hourly Chart, 7d MA)

The rise in inflow of Bitcoin to exchange platforms is typically considered a bearish sign. A higher volume of BTC held in exchange wallets implies there is a higher volume of the asset available for sale, increasing selling pressure and negatively influencing the cryptocurrency’s price. 

Interestingly, rising exchange inflow has translated into increased BTC reserves on exchanges, except for Coinbase. It's important to note that the institutional activity on Coinbase was one of the main catalysts for the $25,000 breakout. 

On March 11 and 12, institutional investors engaged in mass Bitcoin purchases on Coinbase. Part of the absorbed BTC is now being withdrawn from the exchange and redistributed. 

Bitcoin exchange reserves

Analysts at CryptoQuant believe it is possible that the redistributed BTC is being sold, due to the macro scenario of risk aversion and a drop in market liquidity as a whole.