Bitcoin holdings on Coinbase reach lowest level since 2015 as whales withdraw $1B BTC

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A few users on X believe the movement of funds indicates a supply shock prior to the halving, while others pointed out that whales are just moving funds to OTC desks or other custodians.

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Bitcoin holdings on Coinbase reach lowest level since 2015 as whales withdraw $1B BTC

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Bitcoin holdings on Coinbase crypto exchange have fallen to their lowest level in nine years as users move a significant chunk of their holdings off the exchange.

According to a report from CryptoQuant, whales moved 18,000 Bitcoin (BTC) worth nearly $1 billion off Coinbase over the weekend, with transfer values ranging from $45 million to $171 million. Coinbase’s public order book now holds around 394,000 BTC, which is estimated to be worth $20.5 billion.

Coinbase exchange netflow of BTC. Source: CryptoQuant

Whales moving their BTC holdings away from centralized exchanges is considered a bullish sign as less Bitcoin is available for sale. However, users on social media are divided over the nature of the transfers. Some believe the funds are being moved to custodial wallets in anticipation of a price surge, with the upcoming Bitcoin halving, just two months away, creating a supply shock. While a few others believe that the moved funds could be used for liquidity for over-the-counter (OTC) trades.

Largest hourly #Bitcoin outflow in 2024 from Coinbase today: 18,746 Bitcoin moved in two transactions at the same block.

However, the transactions have all the patterns that would suggest:

– The Bitcoin is going into custody (input consolidation, new addresses being created… pic.twitter.com/FvH1wBXg1X

— Julio Moreno (@jjcmoreno) February 19, 2024

Others suggested that the funds could be going to a different custodian and that they aren’t individual withdrawals, as most of what’s in these exchanges “doesn’t belong to them anyways, so this number should be a lot lower.”

With every Bitcoin halving cycle, the amount of new BTC entering the market is reduced by half, creating a supply crunch as demand grows. The next BTC halving will happen in April at a block height of 740,000. The block reward for each block mined by miners will be reduced from 6.25 BTC to 3.125 BTC. The upcoming halving also comes amid massive institutional demand, with 11 spot Bitcoin exchange-traded funds (ETFs) approved in the United States in January.

Related: Grayscale’s GBTC outflows reach $7B, but data shows it’s slowing

Currently, around 900 BTC is mined daily, while Bitcoin ETF’s daily net inflows are about half a billion dollars or about 9,650 BTC despite Grayscale registering nearly $100 million in daily outflows.

Post-April halving, the daily amount of BTC produced will be reduced to about 450 BTC, with institutional demand continuing to rise. This massive supply-demand gap has historically proven bullish for the Bitcoin price, with new all-time highs coming within a year of the halving.

Bitcoin is trading at around $52,000, its highest level since December 2021, down 25% from its all-time high of around $69,000.

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