A massive amount of Bitcoin is being actively removed from exchanges by traders and investors, according to the most recent Glassnode data. As the project suggests, March became the fourth month in a row when exchanges lost around 100,000 BTC.
Series of exchange outflows
Starting from the end of 2021, traders and investors were actively moving funds away from exchanges as trust in centralized exchanges dropped significantly and the market slowly entered the accumulation phase.
#Bitcoin exchange outflow volume recently hit a rate of 96.2k $BTC per month.— glassnode (@glassnode) April 4, 2022
Aggregate exchange outflows of this magnitude have only been seen on a handful of occasions through history, with most being after the March 2020 liquidity crisis.
Live Chart: https://t.co/k9wM940HCQ pic.twitter.com/836zjf39Nh
Back at the beginning of January, Bitcoin already lost almost 40% of its value since reaching the all-time high. Reportedly, at that time, Bitcoin whales started accumulating new coins in their wallets by purchasing new assets on centralized exchanges and moving them to their noncustodial wallets.
With intensified accumulation and supply removal from trading platforms, Bitcoin may become a victim of a supply shock in the future in the event of the appearance of strong demand from retail or institutional traders.
Investors losing trust
Another cause fueling large exchange outflows is tied to the series of limitations and bans of account on large exchanges like Kraken or even Binance. The CEO of Kraken urged users to move their holdings away from exchange-controlled wallets in order to avoid any trading or withdrawing restrictions, which the exchange management team cannot control due to the regulators of the countries they are based in.
While large investors choose wallets over trading platforms, smaller market participants are moving their funds to decentralized trading platforms that can avoid sanctions or regulations from third parties.