The amount of money flowing out of and into cryptocurrency exchanges is one of the factors that could indicate a shift in the price of anasset, and Bitcoin has recently seen a significant outflow from these platforms.
On April 14, Bitcoin exchanges lost up to 25,878 BTC ($1.04 billion) in just 24 hours, the highest outflow in five weeks. On April 21, Crypto Quant reported that Bitcoin spot exchange reserves have fallen to their lowest level in over four years.
The platform for on-chain data tweeted:
$BTC Spot Exchanges’ Reserve hits over a 4-year low
Live Chart👇https://t.co/52cmYEeYFo pic.twitter.com/BqB7koB5i0
— CryptoQuant.com (@cryptoquant_com) April 21, 2022
Bitcoin’s Impact on Crypto Exchanges
Large amounts of Bitcoin moving off exchanges cause prices to rise if the trend continues for a few days, according to historical data.
According to Santiment, an on-chain and social metrics platform, “Historically, large quantities of BTC moving off exchanges leads to price rises given a few days for the pattern to hold.”
Bitcoin flowing out of exchanges is frequently regarded as a positive development in the crypto space for two reasons. The pattern suggests that Bitcoin owners are no longer eager to sell their coins for a variety of reasons, preferring instead to ‘HODL.’
Additionally, this means that there are less BTC available on the market for whales to dump, and liquidity is drying up as a result of the general shortage of Bitcoin.
Keep your own keys is a basic rule of Bitcoin assets, and the pattern may also signal that users are taking this advise more seriously in the current climate.