Since the launch of the United States spot exchange-traded funds (ETFs) for Bitcoin, the cryptocurrency market has seen a significant shift in Bitcoin holdings on exchanges.
Over $9.5 billion in Bitcoin has been withdrawn from exchanges, as reported by Glassnode, an on-chain analytics firm.
This withdrawal trend started on January 11 and has led to a reduction of over 136,000 BTC from exchange balances.
The dynamics of Bitcoin supply are increasingly favoring bulls with continued mass withdrawals observed this quarter.
The volume of Bitcoin on exchanges has dipped to its lowest since April 2018, with only 2,320,458 BTC remaining, indicating a substantial decline in available BTC for trading.
This trend continued with one of the largest single-day withdrawals occurring on March 27, where over 22,000 BTC, equivalent to $1.54 billion, were withdrawn.
The impact of U.S. spot Bitcoin ETFs, though they have been operational for just under three months, is becoming a pivotal factor in the market.
Additionally, notable market activities include a significant transfer of the stablecoin USD Coin (USDC) to Coinbase, highlighted by J.A. Maartunn from CryptoQuant.
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This record transfer raised speculations about potential buying pressure in the market. Such movements underscore the evolving dynamics in the cryptocurrency market, particularly in the context of Bitcoin supply and demand.
Experts are closely watching the ETFs’ impact on Bitcoin’s supply, anticipating a possible “squeeze” where demand surpasses the available supply, potentially affecting prices.
This scenario is expected to intensify, especially with the upcoming block subsidy halving event in mid-April, which will further reduce the rate of new BTC entering the market to just 3.125 BTC per block.
Charles Edwards, founder of Capriole Investments, commented on the significance of the upcoming halving event, noting it as “the biggest Halving in Bitcoin’s history.”
He pointed out that Bitcoin would become even more scarce than gold, with the supply growth rate halving.
Edwards anticipates increased institutional demand through ETFs, a supply squeeze from the Halving, and Bitcoin’s new status as the world’s hardest asset, making April a month to watch for the cryptocurrency sector.
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