Recent data reveals a significant surge in Bitcoin outflows from exchanges, with approximately $750 million in assets withdrawn on Sept. 10.
According to the IntoTheBlock (ITB) data, this represents the largest net outflow of Bitcoin (BTC) since May, potentially signaling a shift in investor sentiment as BTC price hovers around $57,000.
ITB chart depicting roughly $750 million in BTC net outflows on Sept. 10. Source: IntoTheBlock
In a Q&A with Cointelegraph, Juan Pellicer, a senior researcher at ITB, explained that outflows drive this kind of sentiment shift as investors anticipate “price increases” and move coins to private wallets.
“Regulatory concerns can prompt withdrawals as users seek to avoid potential restrictions. Institutional accumulation typically involves large-scale transfers from exchanges.”
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Cold storage and investor strategy pre-FOMC
One potential explanation for the spike in outflows is transferring BTC to “cold storage” hardware wallet options, typically employed by traders and investors when moving assets off exchanges.
Pellicer explained that a “growing trend of self-custody” contributes to outflows “driven by security concerns,” pushing BTC holders toward cold storage.
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Institutional outflow influence
The volume of BTC leaving exchanges on Sept. 10 hints at institutional involvement, as Pellicer notes the “$2.95 billion volume of yesterday suggests significant institutional involvement.”
“...retail investors rarely move such large amounts in total. However, some portion likely comes from retail.”
Institutional involvement in the cryptocurrency market, specifically with the marked BTC outflows, could indicate a more long-term bullish stance on the asset.
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Historical correlations
Historically, large outflows of BTC have been associated with subsequent price increases, primarily resulting from reduced exchange supply and increased demand.
Pellicer confirmed this historical correlation, explaining that it “stems from basic supply-demand dynamics.”
“As Bitcoin leaves exchanges, available supply for trading decreases. Assuming demand remains stable or increases, this supply reduction typically leads to upward price pressure.”
ITB chart depicting roughly $1 billion in BTC net outflows on May 31. Source: IntoTheBlock
According to ITB data, 16,050 BTC worth roughly $1 billion in net outflow left exchanges on May 31, before BTC price hit $71,000 just five days later.
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