Bitcoin has entered the early phase of a new bull market after rallying more than 25% since early last week, but it still needs to close above its 365-day moving average near $83,000 for official confirmation, according to onchain analytics firm CryptoQuant. The distinction matters because historically, bitcoin's bull markets have officially begun when price crosses above this key technical level, while bear markets begin when it crosses below it.

What's Driving Bitcoin's Recent Rally?

Two major macroeconomic catalysts have fueled bitcoin's recent surge. The U.S. Treasury announced plans to double its long-term government bond buybacks to at least $4 billion per operation starting September 9, and President Donald Trump suggested the U.S. government may be considering purchasing bitcoin as a strategic reserve asset. These developments have shifted market sentiment and attracted fresh buying interest.

CryptoQuant's Bull Score jumped dramatically from 30 to 80 in just one week, marking its strongest reading since October 6, 2025, when bitcoin was trading around $124,000. Eight of the ten onchain, market, and valuation metrics in the score are now flashing bullish signals. Additionally, spot demand is growing at its fastest monthly pace since late December, suggesting genuine accumulation rather than speculative leverage.

Why Are Exchange Inflows Rising Despite the Rally?

While the bull market narrative appears compelling, a concerning pattern has emerged on major cryptocurrency exchanges. Exchange inflows have surged across multiple assets, signaling that traders and whales may be preparing to distribute holdings rather than hold them.

• Bitcoin Inflows: Bitcoin deposits to exchanges climbed to approximately 53,000 BTC, the highest level since June 5, indicating large holders are moving coins to trading platforms.
• Ethereum Inflows: Ether (ETH) inflows jumped to about 1.7 million ETH, also the highest since June 5, suggesting similar distribution patterns among ethereum holders.
• XRP and Altcoin Activity: XRP whale inflows rose to about 460 million XRP, their highest level since February, while altcoin 7-day cumulative transactions reached around 39,000 deposit transactions, the highest since early July, with most activity concentrated on Binance.

"When holders transfer Bitcoin (or ETH, XRP and other assets) onto exchanges, especially in a sudden spike after a sharp rally, it signals intent to distribute, take profit, or hedge, and it expands the readily sellable supply," CryptoQuant stated.

CryptoQuant, Onchain Analytics Firm

This pattern suggests the market may be overheated in the short term. Traders' unrealized profit margin has climbed to 20.5%, its highest level since June 2025. Historically, similar profit levels have preceded traders realizing gains and booking profits, which adds selling pressure to the market.

How to Interpret Exchange Inflows and Market Signals

• Profit-Taking Indicator: Short-term holders, often called "new" whales, booked $1.2 billion in realized profits from August 20 to August 22, including a single-day record of $614 million on August 20 as bitcoin traded near $78,000 to $79,000.
• Bull Market Confirmation Level: Bitcoin currently trades roughly 5% below the 365-day moving average at $83,100, meaning a decisive break above $83,000 would confirm the new bull market officially; until then, that level is likely to act as initial resistance.
• Genuine Demand vs. Leverage: Spot and futures demand are expanding together for the first time since early October 2025, when bitcoin reached its previous all-time high, reflecting genuine spot accumulation alongside returning leverage rather than pure speculation.

Julio Moreno, head of research at CryptoQuant, explained the technical significance of the current price level. "Historically, bitcoin's bull markets have 'officially' begun when price crosses above its 365-day moving average (red line in the chart), and bear markets when it crosses below, a definitive signal in past cycles," Moreno stated. He added that a decisive break above $83,000 would confirm the new bull market; until then, that level is likely to act as initial resistance, with the possibility of an early bull market correction.

The divergence between bullish onchain metrics and rising exchange inflows creates an interesting tension in the market. While demand indicators suggest genuine accumulation is occurring, the sudden spike in deposits to exchanges suggests some holders are taking chips off the table. This dynamic underscores the importance of monitoring multiple data sources when evaluating market direction, particularly during periods of rapid price appreciation when both genuine buyers and profit-takers are active simultaneously.