Numerous cryptocurrency exchanges note an outflow of Bitcoin balances in recent weeks. Over the past seven days, this momentum has become more outspoken. Particularly Coinbase is struggling a bit in this regard.
Bitcoin Exchange Outflow Continues
For some time now, there have been rumors about how exchanges see more BTC being pulled from their platform. The rising BTC value is undoubtedly a contributing factor to this emerging trend. Whereas some expect more people to sell BTC at current values, that is not necessarily the case. According to some analysts, there may be a genuine “Bitcoin supply shortage” on trading platforms shortly.
Looking at the numbers, it becomes clear some of the more prominent exchanges have a higher outflow. Both Coinbase and Bitstamp are bleeding Bitcoin balances lately. Both of these exchanges focus heavily on regulatory compliance, a concept that doesn’t fit with Bitcoin’s norms and values.
Furthermore, some traders likely buy BTC on these platforms and move the funds to their private wallets. If one is serious about Bitcoin as an investment, keeping funds on an exchange is the least viable option. Trusting an intermediary with one’s cryptocurrency funds is far from ideal. As such, the outflow affecting Coinbase, Bitstamp, and others is not too surprising.
Despite this ongoing outflow, Coinbase still has over 805,000 BTC – or $25.5 billion – on the platform. As the company has an immense balance sheet compared to other exchanges, it’s not abnormal to see its outflow be more outspoken. The second exchange on the list holds just under 160,000 BTC, less than 20% of what Coinbase represents.
Some Positive Momentum
While the majority of exchanges note a steep outflow, there are exceptions. Binance, for example, reports a positive week. Its Bitcoin holdings are now 2,106 BTC higher than seven days ago. Some of these funds may come from other exchanges. There is no indication as to why people want to deposit more BTC on Binance as of late.
Further down the list, there is a small positive net change for BitFlyer, Poloniex, and BTC.top. None of these platforms put up strong growth, but it is an intriguing trend regardless. For BitFlyer, there is a +3 BTC difference in seven days. Poloniex and BTC.Top note increases of 35 and 67 BTC, respectively.
Overall, there are still significant amounts of BTC leaving exchanges’ wallets. This outflow cannot be ignored but should not be taken out of context either. A supply shortage for BTC is unlikely to occur. Centralized exchange trading is merely a facet of how people acquire Bitcoin today.
A big difference between 2021 and 2017 is that Bitcoins are not being bought as a pass-through to facilitate degenerate gambling in alt-coins.
Bitcoins are being bought so they can be HODL'd. This is why so many bitcoins are being withdrawn from major exchanges. pic.twitter.com/acHOKhaAga
— Vijay Boyapati (@real_vijay) January 3, 2021
Assuming larger institutions and investors are paying attention, the coming months will prove interesting. Bitcoin has been on a tear lately, triggering an ongoing exchange outflow. However, it also remains an incredibly volatile asset. That volatility will not go away when its value rises.
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