HODL sentiment rising? Funds fleeing exchanges, Bitcoin outflow hits new high

According to data from Glassnode, a cryptocurrency data analysis platform, the balance of Bitcoin on exchanges has been decreasing steadily over the past two months, with a nearly 12% decrease since the crash in March. Researchers at Glassnode state that this is the largest and longest-lasting trend of decreasing Bitcoin balances on exchanges in the history of Bitcoin.

Exchange Balances Decline

According to the market research report released this week by the cryptocurrency data analysis platform Glassnode, the Bitcoin balances in the wallets of major cryptocurrency exchanges have witnessed the largest historical drop. The data is sourced from 14 exchanges including Binance, Bitcoin.de, Bitfinex, BitMEX, Bitstamp, Bittrex, Coinbase, Gemini, Hitbtc, Huobi, Kraken, Luno, OKEx, and Poloniex.

The downward trend began during the mid-March market crash when the price of Bitcoin briefly dropped below $4,500. However, in less than two months, Bitcoin has recovered from the major collapse, surging over 100%, and the price has returned to pre-crash levels. Interestingly, while Bitcoin's price was rising, the balances in exchange wallets continued to decrease. According to Glassnode's data estimates, approximately 310,000 Bitcoins have flowed out of cryptocurrency exchanges in the span of two months. Glassnode analyst Liesl Eichholz stated in the research report:

"Since the crash in March, the amount of Bitcoin in exchange wallets has been steadily decreasing and is now close to a one-year low. This is the largest and longest trend of decreasing Bitcoin balances on exchanges in Bitcoin's history."

Possible Factors Behind This Trend

Most people may attribute this trend to the bullish expectations of long-term holders. To maximize asset security, these Bitcoin holders choose to withdraw their Bitcoins from exchanges and store them in their cold wallets. The increase in the number of addresses holding large amounts of Bitcoins reported earlier also supports this point. However, whether the reason for large holders being bullish on Bitcoin is based on the halving of production remains uncertain. According to Glassnode analysts, although not to the extent of Bitcoin, Ethereum has also experienced a similar trend of decreasing exchange balances during the same period:

"The trend of withdrawals from exchanges may be partially due to the price increase expectations of Bitcoin post-halving. However, this cannot fully explain the actual situation as Ethereum (although to a different extent from BTC) has also shown a similar trend of withdrawals during the same time."

In addition to the bullish expectations of long-term holders, another partial reason may be the lack of trust in exchanges. Among all exchanges, the derivatives exchange BitMEX has seen the highest outflow of Bitcoin. Speculations suggest that this situation may be related to BitMEX's temporary shutdown during the March crash period. However, overall, the impact of "lack of trust in exchanges" seems less significant compared to the "bullish expectations of long-term holders."