Why did the BTC trend between inflows & price volatility reverse?
The first two months of 2021 saw the relationship between the two parameters flip in Bitcoin, as 'normalcy' returned in March
Moving on, today we will be looking at the relationship between Bitcoin inflows to exchanges and USD bitcoin price volatility. According to the Chainalysis Market Intel, Bitcoin inflows to exchanges are at historical lows and price volatility is high. As the left chart above suggests, inflows to exchanges have only been as low as they are now in Q4 of 2018 and Q4 of 2019, when the bitcoin price was slowly declining.
The difference between now and then, however, is that Price volatility was also low at those times, whereas now price volatility is high. The flipping of current price volatility and moving in the opposite direction to inflows suggests that it may be driven by rapid changes in demand, rather than the supply of bitcoin available to buy.
Why did the BTC trend between inflows & price volatility reverse?
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