Bitcoin (BTC) Is Pouring out of Exchanges Amid Its Recent Price Resurgence

Over the past three weeks, investors have pulled more than $10 billion worth of Bitcoin from crypto exchanges, Glassnode data shows — and that could prove super-bullish for the cryptocurrency.

Investors have pulled billions of dollars worth of Bitcoin from crypto exchanges amid its recent price resurgence.

And that could spell good news for the cryptocurrency, as it may signal an impending supply crunch.

Over the past three weeks, investors have pulled more than $10 billion worth of Bitcoin from crypto exchanges, Glassnode data shows.

After a steep decline in early 2023, Bitcoin's presence on exchange wallets dropped notably over the past month, signaling a strong seven-week outflow.

The move comes as Bitcoin surged 24% in the last month and rose as high as $105,000 this week, after testing the $90,000 level last week.

Bitcoin's move past $100,000 confirms the strength of the recovery and may set the stage for new all-time highs, Bitfinex analysts said.

However, the world’s largest cryptocurrency could be setting itself up for a steeper fall if the U.S. government seizes and liquidates a large portion of crypto in its ongoing case against Binance.

Bitcoin's trajectory is undeniably upward, hybrid layer 2 network BoB co-founder Dom Harz said.

"We've seen a consistent increase in Bitcoin's price over the past few months, and this upward trend is likely to continue," Harz said.

"As we move into the second half of 2024, we can anticipate further gains in Bitcoin's value."

A lack of sellers and rising demand for Bitcoin has led to a steep decline in exchange liquidity and a corresponding increase in coin scarcity, which in turn drives up prices.

"We're observing a substantial reduction in Bitcoin's presence on exchanges, which is noteworthy because it's an indicator of the cryptocurrency's supply," said TokenMind founder and CEO Dmitry Litvinov.

"As less Bitcoin remains on exchanges, it becomes more challenging to sell and exert downward pressure on prices."

However, another Bitcoin analyst, James Check, isn't convinced by the outflow narrative.

A portion of the coins flowing out of exchanges are likely coins migrating between exchange-traded fund custodians and exchange cold wallets, as these entities reshuffle their balances, Check argued in a blog post this week.

And when filtering the data for wallet shuffling, exchange balances have remained flat for the last five years, Check said.

Market data from CryptoQuant shows Bitcoin balance on exchanges peaked at 3.4 million coins in 2022 but has since declined to about 2.6 million coins worth $263 billion.

But there isn't any causal link between Bitcoin outflows and price booms.

"This happens every cycle," Check said, and dismissed the supply squeeze claims as bullish folklore.

Another Bitcoin analyst, Mark Helfman, called the supply squeeze narrative "a terrible myth" in a blog post last year.

Helfman said only a small fraction of Bitcoin transacted daily are withdrawn from exchanges.