Bitcoin holdings on the Coinbase cryptocurrency exchange have reached their lowest point in nine years as users transfer a significant portion of their holdings off the platform. According to a report by CryptoQuant, whales have moved 18,000 Bitcoin, valued at almost $1 billion, off Coinbase over the weekend. The transfers ranged in value from $45 million to $171 million. Currently, Coinbase’s public order book holds approximately 394,000 BTC, estimated to be worth $20.5 billion.
The movement of BTC holdings away from centralized exchanges by whales is seen as a positive sign, as it reduces the availability of Bitcoin for sale. However, there is a division of opinions on social media regarding the nature of these transfers. Some believe that the funds are being moved to custodial wallets in anticipation of a price surge, with the upcoming Bitcoin halving, just two months away, expected to create a supply shock. Others speculate that the funds could be used for liquidity in over-the-counter trades.
There are also suggestions that the funds might be going to a different custodian, and that they are not individual withdrawals, as most of the assets held by these exchanges do not actually belong to them, meaning the number of outflows should be lower.
During each Bitcoin halving cycle, the amount of new BTC entering the market is cut in half, causing a supply shortage as demand increases. The next halving is scheduled to occur in April at a block height of 740,000. After the halving, the block reward for miners will be reduced from 6.25 BTC to 3.125 BTC. This halving coincides with significant institutional demand, as 11 spot Bitcoin exchange-traded funds (ETFs) were approved in the United States in January.
Currently, around 900 BTC is mined daily, while daily net inflows to Bitcoin ETFs amount to about half a billion dollars or approximately 9,650 BTC, despite Grayscale experiencing daily outflows of nearly $100 million. After the halving, the daily production of BTC will be reduced to about 450 BTC, while institutional demand continues to rise. This discrepancy between supply and demand has historically resulted in a bullish Bitcoin price, often reaching new all-time highs within a year of the halving.
Bitcoin is currently trading at around $52,000, its highest level since December 2021, representing a 25% decrease from its all-time high of approximately $69,000.