270,000 BTCs have left the exchanges in the last 30 days.
This could be due to an increase in purchases of institutional investments.
As investors become involved, exchanges may face liquidity problems.
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Data collected by Glassnode, a blockchain analysis platform, shows that an impressive 270,000 Bitcoin Trader, worth approximately $9 billion at current prices, have left the exchanges for cold storage over the past month.
The end of 2020 was marked by a sharp rise in the price of Bitcoin, but prices began to ease and become less volatile in the new year.
Although prices began to consolidate somewhat, more and more BTCs are leaving the exchanges so that they can remain more secure in cold portfolio storage.
This may mean that investors are less interested in taking positions and prefer to move their CTS off the exchanges so that it remains safer in a cold portfolio.
The liquidity of exchanges is drying up
As more and more crypto-currencies such as Bitcoin are removed from exchanges and placed in cold storage for longer term preservation, the availability of assets on exchanges continues to decrease. This makes sense, as the supply of BTCs is limited. The more it is stored, the less available it is to be exchanged.
If this trend continues, the entire industry could one day face a crisis on the selling side, with a significant lack of liquidity. This is not a problem that only Bitcoin faces: other cryptomoney companies are also facing potential liquidity problems.
Last week, Ethereum experienced its lowest provisioning ratio since 2018, indicating that users have switched to storing and staking their ETH.
Ethereum Supply Running Out?! Will Ethereum Liquidity Crisis Push Price Up?
Effect of Institutional Demand on Bitcoin Supply
Although some cryptomoney companies such as Ethereum have already experienced supply cycles of this type, Bitcoin has never experienced such a high level. This is one of the reasons why many analysts believe that the current rise in the cryptocurrency market is fundamentally different from what was observed in 2017.
Prior to 2020, institutional investments in Bitcoin were miniscule because most companies did not want to bet on such a volatile asset. After the global, social and financial problems encountered following the emergence of the COVID-19 pandemic, institutional investors finally began to see Bitcoin as a real hedge against inflation and government incompetence.
This idea was largely initiated by Bitcoin „bulls“ like Michael Saylor, the CEO of Microstrategy, who invested more than $1 billion of his company’s cash reserves in Bitcoin. This new vision of Bitcoin as a better store of value than gold has sparked a whole new wave of interest in the asset.
As more and more institutions demand the purchase of their Bitcoin, supplies will be sucked from the exchanges and end up in the deep pockets of these institutions.