With Bitcoin exchange balances at multi-year lows and whale-sized purchases by MacroStrategy and Luna Foundation Guard, this week’s BTC fundamentals are positively bullish signals.
Bitcoin Exchange Outflows at Historic Levels
Outflows from Bitcoin exchanges this week reached historic levels for the world’s oldest and most sought-after cryptocurrency. In a weekly blockchain insights newsletter Tuesday, on-chain Bitcoin analytics firm Glassnode says:
“We can see that exchange balances have also experienced a historically significant period of BTC outflows in response [to BTC whales and the broader market’s stout accumulation over the week], reaching an outflow rate of 96.2k BTC/month. Outflows of this magnitude are uncommon, having happened on only several occasions through history.”
“Bad money drives out good.” -Sir Thomas Gresham (1519–1579)
Exchange market liquidity for bitcoin has plunged to 2.472M BTC. The availability of the coin on liquid markets hasn’t been this low since Q3 2018. Even with the price of a coin at exchange retracing after a solid month of gains, these are considerable medium to long-term fundamentals.
As Gresham’s Law would have it, the market views Bitcoin as “good” money, even as investors across the broader global financial market go “risk off” this quarter.
Where’s all that coin going? Exchange liquidity is dropping as participants in crypto exchanges withdraw their bitcoin from centralized and decentralized custodial accounts to their own privately maintained wallets.
With a combination of well-constructed heuristics and sophisticated proprietary data scraping and crunching algorithms, Glassnode has been able to surmise that this is a broad-based market phenomenon including small amateur investors across the gamut of wallet sizes.
Meanwhile, private BTC whale addresses are racing to accumulate as well, continuing the tsunami of accumulation that started off in March at a 10-month high a month ago after addresses holding more than 100 and 1000 BTC spiked suddenly. And large public investors are among those.
MacroStrategy took another $190 million chomp, the Michael Saylor-led company announced this week. And in order to hold collateral for its Luna stablecoin (LUNA), Terra bought 2,943 BTC at $140 million USD last week and another $230 million today.
The Bottom Line
Glassnode sees the whales making a big splash. Furthermore, smaller wallets with <1BTC are piling up sats too this week, continuing the past month’s trend.
This is a strong medium to long-term indicator because it signals the intention of the broad-based market from shrimps to whales, to hodl their bitcoin rather than trade for fiat or altcoins, according to the company.