The latest decline in Bitcoin’s market price has triggered some patterns among traders, as $728 million in Bitcoin was withdrawn from exchanges as the market price continue to take a bullish pattern.
Irrespective of Bitcoin’s aggressive stance wilting to hold onto particular price levels under severe pressure, it still reinforces the long-term accumulation trend – even with the prevailing market fluctuations – signaling an intriguing shift in the dynamics of the market.
Although the overall market remains volatile, the flow of funds has paralleled with the typical patterns on-chain, showing an important relationship in the process of demand and supply.
Movements regarding holders with higher concentrations of Bitcoin, are withdrawing their significant amount of digital assets from exchanges, which may pose a substantial impact on Bitcoin’s price development in the coming months.
Bitcoin Price facing Increase pressure
As Bitcoin price continued to struggle below $54,000, short-term traders appeared increasingly uncomfortable with the downward pressure on Bitcoin price. Long-term investors, primarily those with significant amounts of Bitcoin, are taking advantage of a lowering price, continuing to purchase and withdraw large amounts of BTC.
Out of notable markets, blockchain analytics firm IntoTheBlock reported that within the last week, $728 million worth of Bitcoin has withdrawn from exchanges.
Notably, these trends signal a definitive net negative flow of Bitcoin from exchanges. Total inflows from exchanges over the last week was documented with a net flow of $220.6 million suggestive of holders transferring/BTC withdrawn at rates faster than BTC deposits. Specifically, most withdrawals occurred with wallets hosting between 100 to 1,000 BTC which are identified with institutional holders or ultra-high-net-worth individuals.
Bitcoin is currently trading at $54,614. Chart: TradingView
On-chain withdrawals like these can often signal that investors are preparing for long-term storage, moving their holdings to private wallets.
When Bitcoin is moved off exchanges, it becomes less available for immediate sale, reducing market supply and creating potential upward pressure on prices.
On-chain withdrawals such as these can also indicate that investors are gearing up for long-term storage, transitioning their assets into their private wallets. Off an exchange, Bitcoin becomes less and less available for immediate sale, considerably decreasing market supply, which could create upward price pressures.
What does this mean for Bitcoin prices?
Based on market statistics, whenever significantly large quantities of Bitcoin come off exchanges, the supply squeeze seen often leads to price increases. With less Bitcoin available to trade, the mechanics of supply and demand will begin to work in the favor of bullish price movement.
However, this accumulation is happening at the same time as other concerning trends that may dampen further price expectations.
Most notably, Bitcoin has not appreciated in price despite the significant increase in exchange withdrawals. This can be explained by other factors in the market, mainly attributed to outflows from Spot-based Bitcoin ETFs in the U.S.
ETFs experienced significant capital outflow last week of $169.97 million, which is now eight days of consecutive outflows. This bearish attitude amongst institutional investors may be overshadowing the accumulation happening from long-term Bitcoin holders.
Bitcoin ended the month of August down 8.6% and did not reach investor expectations for a turnaround. Recent news says that Bitcoin is trading around $54,614, with further downward selling pressure continuing to remain a risk if conditions do not improve.
