Coinbase Crypto Exchange Witnesses Significant Decrease in Bitcoin Holdings
In a surprising development, the amount of Bitcoin held on the Coinbase crypto exchange has reached its lowest point in nearly a decade. According to a report by CryptoQuant, large investors, known as whales, have transferred a total of 18,000 Bitcoin, valued at almost $1 billion, off the exchange over the weekend. The transfer amounts ranged from $45 million to $171 million. As a result, Coinbase’s public order book now holds approximately 394,000 BTC, which is estimated to be worth $20.5 billion.
The movement of BTC holdings away from centralized exchanges is generally seen as a positive sign, as it means that less Bitcoin is available for sale. However, opinions are divided among users 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, especially with the upcoming Bitcoin halving just two months away, which is expected to create a supply shock. On the other hand, a few others speculate that the funds could be used for liquidity in over-the-counter (OTC) trades.
There are also suggestions that the transferred funds may be going to a different custodian, and that they are not individual withdrawals. This is because the majority of the funds held on these exchanges do not actually belong to them, so the number of withdrawals should be significantly lower.
During every Bitcoin halving cycle, the amount of new BTC entering the market is halved, leading to a supply shortage as demand continues to rise. The next halving is set 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 event coincides with a period of significant institutional demand, as 11 spot Bitcoin exchange-traded funds (ETFs) were approved in the United States in January.
Currently, around 900 BTC are mined daily, while daily net inflows of Bitcoin ETFs amount to approximately half a billion dollars, equivalent to about 9,650 BTC. Despite this, Grayscale, a major player in the crypto market, has reported daily outflows of nearly $100 million.
Following the April halving, the daily production of BTC will be reduced to approximately 450 BTC, while institutional demand is expected to continue rising. This significant gap between supply and demand has historically resulted in a bullish trend for the Bitcoin price, with new all-time highs being reached within a year of the halving event.
As of now, Bitcoin is trading at around $52,000, its highest level since December 2021. However, it is important to note that this price reflects a 25% decrease from its all-time high of approximately $69,000.
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