Since the launch of the United States spot exchange-traded funds (ETFs), nearly $10 billion worth of Bitcoin (BTC) has been withdrawn from crypto exchanges. Data from on-chain analytics firm Glassnode reveals that exchanges have experienced a decrease of over 136,000 BTC since January 11. Despite the absence of signs of profit-taking in Bitcoin exchange trends, there has been a mass withdrawal of BTC from exchanges this quarter, favoring bullish Bitcoin supply dynamics.
The U.S. spot Bitcoin ETFs have only been trading for less than three months, but during this time, approximately $9.5 billion worth of BTC has been withdrawn from major trading platforms. As of March 28, the combined BTC balance on exchanges, as tracked by Glassnode, stood at 2,320,458 BTC, the lowest balance since April 2018. This trend shows no indications of slowing down. On March 27 alone, withdrawals amounted to more than 22,000 BTC ($1.54 billion), marking the third-largest daily withdrawal of 2021.
Simultaneously, J.A. Maartunn, a contributor to on-chain analytics platform CryptoQuant, analyzed market flows and highlighted a significant transfer of stablecoin USD Coin (USDC) to Coinbase, the largest U.S. cryptocurrency exchange. He noted that this was the largest inbound transfer of USDC in history and questioned whether it signaled strong buying pressure.
The long-term impact of ETFs on the available BTC supply and consequently its price has become a highly debated topic among market observers. Several sources now predict that a significant supply squeeze, where demand outpaces available BTC for sale, will be felt within the next six to twelve months. ETF buying alone already represents a much larger buying force than the daily newly mined BTC. After the upcoming block subsidy halving event in mid-April, this ratio will increase further as the BTC supply expands by only 3.125 BTC per newly mined block.
Charles Edwards, founder of quantitative Bitcoin and digital asset fund Capriole Investments, emphasized the importance of the upcoming block subsidy halving event, stating that it will be the biggest halving in Bitcoin’s history. However, it is crucial to note that this article does not provide investment advice or recommendations, and readers should conduct their own research before making any decisions.