Bitcoin: 270,000 BTCs withdrawn from trading in the last 30 days
- 270,000 BTCs have left the exchanges in the last 30 days.
- This could be due to an increase in purchases of institutional investments.
- As investors become more involved, exchanges may face liquidity problems.
The Trust Project is an international consortium of media organisations based on transparency standards.
The end of 2020 was marked by a sharp rise in the price of Bitcoin, but prices by One Bitcoin a Day began to ease and become less volatile in the new year.
Although prices have started to consolidate somewhat, more and more BTCs are leaving the exchanges so that they can remain more secure in cold portfolio storage.
This could mean that investors are less interested in taking positions and prefer to move their BTCs off the exchanges so that they remain safer in a cold portfolio.
Data collected by Glassnode, a blockchain analysis platform, shows that an impressive 270,000 bitcoins, worth approximately $9 billion at current prices, have left the exchanges for cold storage over the past month.
The liquidity of exchanges is drying up
As more and more crypto-currencies such as Bitcoin are removed from exchanges and placed in cold storage for longer term preservation, the availability of assets on exchanges continues to decrease. This makes sense, as the supply of BTCs is limited. The more it is stored, the less available it is to be exchanged.
If this trend continues, the entire sector could one day face a crisis on the selling side, with a significant lack of liquidity. This is not a problem that only Bitcoin faces: other cryptomoney companies are also facing potential liquidity problems.
Last week, Ethereum experienced its lowest provisioning ratio since 2018, indicating that users have switched to storing and staking their ETH.
Effect of Institutional Demand on Bitcoin Supply
Although some cryptomoney companies such as Ethereum have already experienced supply cycles of this type, Bitcoin has never experienced such a level. This is one of the reasons why many analysts believe that the current rise in the cryptocurrency market is fundamentally different from what was seen in 2017.
Prior to 2020, institutional investments in Bitcoin were miniscule because most companies did not want to bet on such a volatile asset. After the global, social and financial problems encountered following the emergence of the VIDOC pandemic,19 institutional investors finally began to see Bitcoin as a real hedge against inflation and government incompetence.