The volume of Bitcoin held on Coinbase, a prominent cryptocurrency exchange, has reached its lowest point since 2015. Recent data reveals that whales orchestrated the movement of approximately 18,000 Bitcoin valued at nearly $1 billion away from Coinbase over the weekend. Transfer amounts varied between $45 million and $171 million, prompting a significant decline in Coinbase’s public order book, which presently holds approximately 394,000 BTC, equivalent to an estimated $20.5 billion.
The withdrawal of Bitcoin from centralized exchanges, such as Coinbase, by whales is traditionally interpreted as a bullish indicator, as it reduces the cryptocurrency available for sale in the market. Nevertheless, opinions among the cryptocurrency community are divergent regarding the motives behind these transfers. Some assert that the funds are being strategically shifted to custodial wallets in anticipation of an impending price surge linked to the upcoming Bitcoin halving, slated to occur in just two months. This perspective posits that the halving will create a supply shock by reducing the new BTC supply entering the market, heightening demand.
Conversely, an alternative viewpoint suggests that the transferred funds might be destined for over-the-counter (OTC) trades, serving as liquidity. Additionally, there are assertions that the funds may be en route to a different custodian, challenging the notion that these movements represent individual withdrawals, given that a substantial portion of assets on exchanges does not directly belong to the users.
The impending Bitcoin halving, scheduled for April at a block height of 740,000, is anticipated to further exacerbate the supply-demand dynamics. With the block reward per mined block set to decrease from 6.25 BTC to 3.125 BTC, the reduction in daily Bitcoin production to around 450 BTC is expected to intensify the scarcity factor. This occurs against the backdrop of robust institutional demand, evidenced by the approval of 11 spot Bitcoin exchange-traded funds (ETFs) in the United States in January.
Despite the daily net outflows of nearly $100 million reported by Grayscale, the institutional appetite for Bitcoin remains substantial, with Bitcoin ETFs witnessing daily net inflows of about half a billion dollars, equivalent to approximately 9,650 BTC. Post-halving, the supply-demand gap is poised to grow further, as daily Bitcoin production dwindles to around 450 BTC.
This unique confluence of reduced supply and heightened institutional demand historically aligns with bullish trends for Bitcoin prices. As of the latest data, Bitcoin is currently trading at approximately $52,000, representing its highest valuation since December 2021, albeit down 25% from its all-time high of approximately $69,000.
