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$2.5 Billion in Bitcoin Flows Out of Centralized Exchanges
Woman inserting Bitcoin into golden piggy bank
Investor confidence seems to be on the rise in the cryptocurrency market lately, and Bitcoin has been one of the major beneficiaries positive trend. As a result, there has been continued accumulation of BTC among investors on a large scale, despite its somewhat frustrating price action.
The price of the main cryptocurrency may have closed May below the psychological threshold of $70,000, despite touching the level a couple of times in the last two weeks of the month. The latest on-chain data suggests that confidence in Bitcoin has continued to strengthen.
Is BTC Ready for a Price Rally?
Renowned crypto analyst Ali Martinez shared via a placed on the X platform that significant amounts of Bitcoin have left centralized exchanges. This on-chain observation is based on the CryptoQuant Exchange Reserve metric, which tracks the amount of a particular cryptocurrency in the wallets of all centralized exchanges.
An increase in the metric’s value indicates that investors are making more deposits than withdrawals of a crypto asset (Bitcoin, in this scenario) on centralized exchanges. Meanwhile, when the metric decreases in value, implying that more coins are moved outwards than onto trading platforms.
According to Martinez’s post, more than 37,000 BTC (worth approximately $2.53 billion) have been transferred from cryptocurrency exchanges in the past three days. This significant exodus of funds indicates a shift in sentiment and long-term holding strategy of Bitcoin investors.
Although it’s hard to say the exact logic behind it massive outflow from trade, the movement of funds from trading platforms suggests an increase in investor confidence. This indicates that many investors may be convinced by the future promise of Bitcoin, thus opting to keep their assets in long-term self-custodial portfolios.
Furthermore, the downward spiral of Bitcoin supply on centralized exchanges could trigger a bullish rally for the price of the leading cryptocurrency. Prolonged decline in BTC balance on exchanges could result in a supply crisis.
For context, supply crunch refers to a scenario or period during which the supply of a particular asset is less than demand, resulting in an increase in the value of the asset.
Bitcoin price in brief
At the time of this writing, the price of Bitcoin stands at around $67,489, reflecting a 1.5% decline over the past 24 hours. This slow performance over the past day highlights the major cryptocurrency’s struggles over the past week. According to data from CoinGecko, the price of BTC has fallen by almost 2% over the past seven days.
Featured image from iStock, chart from TradingView