Although Bitcoin (BTC) fell below the $ 43,000 mark on Monday, BTC outflows from exchanges have continued to trend for months, particularly at Coinbase Pro.
Over the past month, the amount of Bitcoin in Coinbase Pro’s vaults has dropped by 28,843.87 BTC. Likewise, other crypto exchanges, including Kraken, OKEx, Bitfinex, and Huobi, have seen their bitcoin holdings decline, with a total withdrawal of 30,236 BTC.
On-chain analysts see a decline in Bitcoin reserves as a bullish signal.
This is mainly because most traders only transfer their BTC assets to exchanges when they want to exchange them for other assets – be it fiat currency or altcoins. Hence, the stock market balance serves as a benchmark to measure traders’ sentiment towards the underlying asset.
Thus, Coinbase Pro’s reduced Bitcoin reserves show that the intent of traders is to hold BTC rather than sell it. At the same time, however, its top competitor Binance was playing a scam.
Binance BTC reserves buck the trend
However, the data also shows that the Bitcoin balance in the Binance wallet has increased to 29,717 BTC in the past 30 days, more than the amount that Coinbase Pro withdrew from its vault.
As the world’s leading cryptocurrency exchange by volume, Binance has some leverage in the market due to its global reach. The exchange’s growing Bitcoin balance suggests that contrary to the trend at Coinbase, its users can sell more and more BTC.
The surge in Bitcoin reserves on Binance also hit a sell-off level after the market in the second quarter of 2021. In particular, Bitcoin balances on the exchange rose from 199,700 BTC on April 20 to 347,590 BTC on June 26.
Over the same period, BTC / USD fell from around $ 65,000 to below $ 30,000, including the infamous crash on May 19 when Bitcoin fell more than 30%.
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The massive spike in Bitcoin reserves on Binance also coincided with premium BTC / USD bidding on the exchange, with BTC spot prices on Binance being nearly $ 400 higher than on Coinbase.
The large price difference created arbitrage opportunities that coincided with Binance’s Bitcoin reserves, which added 1,529 BTC in the past 24 hours compared to Coinbase, which processed 579 BTC withdrawals.
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As a reminder, exchanges are still processing over 30,000 BTC withdrawals in the past 30 days, suggesting that traders generally want to keep their cryptocurrency rather than sell it for other assets.
But since Binance’s trading volume (~ $ 24 billion) was six times higher in the last 24 hours than Coinbase Pro’s (~ $ 4.23 billion) at press time – according to data from CoinMarketCap – the possibility exists a temporary drop in Bitcoin price is very high.