Bitcoin Holders Yank $750M of BTC Out of Exchanges, Triggering Largest Net Outflow Since May

Historically, similar outflows have been followed by price increases as often a lower supply on exchanges can lead to a price rise if demand remains steady or rises.

Bitcoin holders have shifted around $750 million in the leading cryptocurrency out of centralized exchanges in a single day this week, marking the largest net Bitcoin outflow since May.

The four-month peak in net Bitcoin outflows occurred on September 10, as the price of Bitcoin recovered to surpass the $57,000 mark. Bitcoin is now already above $58,000.

According to IntoTheBlock’s data, large net outflows from exchanges have historically been followed by price increases. This is because a lower supply on exchanges can lead to a price rise if demand remains steady or rises.

For example, a significant withdrawal in late May coincided with a rally that propelled Bitcoin’s price from just below $68,000 to $72,000 within days. Conversely, large inflows have often led to price declines, as evidenced by the crash in late July and early August.

The net outflows come at a time when data from crypto analytics firm CryptoQuant reveals a significant shift in the dynamics of Bitcoin ownership.

The data shows that short-term holders, defined as those who have held their bitcoin for 155 days or less, have been steadily reducing their positions since late May, indicating weakening demand for the cryptocurrency.

In contrast, long-term BTC holders appear to be accumulating their positions as short-term holders sell off their holdings.

CryptoQuant’s data shows a notable trend over the past few months, as short-term holders have significantly reduced their positions, particularly in July and August.

This sell-off by short-term holders could lead to medium-term price appreciation and market stabilization, according to CryptoQuant contributor IT Tech, who wrote that the “data shows a clear capital flow from weak hands (STH) to strong hands (LTH), signaling market stability.”