The crypto space has been buzzing with activity in the past few days because of the price surge of bitcoin and altcoins. One of these activities that have gone unnoticed is the movement of bulk bitcoins from exchanges. Transactions on the blockchain show that 92,085 bitcoin was withdrawn from major crypto exchanges in the last 30 days.
According to Viewbase, this number accounts for about 6% of the bitcoin balance in these exchanges within the timeframe. The exchanges ranked according to their user bitcoin holdings are Coinbase, Huobi, Binance, Kraken, OkEX, Bitfinex, Bitflyer, Bittrex, Coincheck, Gate.io, Bitstamp, Poloniex, and BTC.top.
Coinbase has experienced the biggest slump in the number of user bitcoin holding. The exchange which reportedly holds the highest amount of bitcoin for users has seen its user holdings drop from 973,000 bitcoin in February 2020 to 805,000 bitcoin presently. Huobi users have withdrawn about 2,085 bitcoins in the past 30 days, while Binance users have withdrawn 2,073 bitcoins in the same period.
The massive withdrawal from exchanges is quite the reverse of what many analysts expect in the present market. It has raised many questions begging to be answered, most popular is the rationale behind these withdrawals. Could it be institutional investors trying to avert the risk of leaving their bitcoin on exchanges or thousands of retail traders suddenly gaining interest in cold storage methods?
Perhaps more bitcoin holders are losing faith in the ability of centralized exchanges to keep their funds safe in a time when hackers are likely to be on a rampage.
It is also possible that the withdrawals are a strategy by whales to increase the amount of illiquid bitcoin. Statistics show that about 78% of the total supply of bitcoin is illiquid. This means that only about 4.2 million bitcoins are liquid and in circulation. By increasing the amount of illiquid bitcoin, they decimate the number of bitcoin in circulation. The scarcity caused by this will then cause a price increase.
Coinbase still keeps its spot as the largest exchange in terms of bitcoin held ($37 billion) followed by Huobi ( $10.8 billion), Binance ($10.2 billion), Bitfinex ($8.86 billion), Kraken ($6.65 billion), and OkEX ($2.79 billion).