On-chain data shows that exchanges have seen net Bitcoin withdrawals over the past three months, the longest streak in the asset’s history.
Exchanges observe bitcoin withdrawals exceeding deposits for three straight months
An analyst on X explained that the total number of bitcoin exchange withdrawals has been higher than deposits recently. Reference is made here to the number of deposits and withdrawals and the number of such transactions.
All transfers on the network going from a self-custodial wallet to a central exchange entity would be considered deposit transactions, while those going in the opposite direction would be considered withdrawals.
Now here is a chart showing the trend in withdrawals and deposits on bitcoin exchanges over the last few years:
How the value of the two key figures has changed in recent years | Source: @ali_charts on X
As shown in the chart above, withdrawal transactions on the bitcoin exchange have been higher than deposit transactions for about three months. This trend is a record for the cryptocurrency, as deposits have typically started to outpace withdrawals again after a short period of time when this pattern forms.
There could be multiple interpretations of what this unusual withdrawal streak might say about the market. The analyst has listed some hypotheses that could explain this trend.
The first, and perhaps the most obvious, reason might be that holders are choosing to hold their bitcoin for longer rather than engage in trading or selling (which is what they generally use exchanges for).
The second explanation could be that investors have become more cautious about central entities and are therefore opting for the security that self-custodial wallets offer. That would make sense given several bankruptcies the sector has seen over the past year that have seen household names like FTX go under.
Another hypothesis is exactly the opposite of the first one: withdrawals are normal, but deposits are subdued, which is due to the fact that holders don’t want to sell their coins through these platforms and therefore don’t make as many deposits anymore.
In conclusion, the analyst notes, “With recent regulatory changes in the US, investors prefer to keep their assets off exchanges to avoid possible complications.” Binance, the world’s largest exchange by trading volume, has been standing as of late especially under fire.
Another analyst took a look at the individual FX reserves (the total amount of Bitcoin in a platform’s wallets) across Binance and Coinbase to see how they’ve changed over the years in a CryptoQuant Quicktake post.
It looks like the value of the metric is currently red | Source: CryptoQuant
Binance has seen increasing bitcoin reserves for much of the past year (despite factors like the bear market), but lately the exchange has seen net withdrawals.
Coinbase, on the other hand, has had withdrawals for quite some time, suggesting that the platform is constantly bleeding coins.
The stock market continues to see outflows | Source: CryptoQuant
BTC price
Bitcoin has been flat lately as the asset’s price is still hovering around $25,900.
BTC continues to consolidate sideways | Source: BTCUSD on TradingView
Featured image by Kanchanara on Unsplash.com, Charts by TradingView.com, CryptoQuant.com, Glassnode.com
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