Bitcoin traders withdraw $728 million from exchanges despite drop in spot price

Bitcoin’s price action may be unfavorable for bullish proponents, but it remains a hotbed for serious money movement on the blockchain. Bitcoin once again fell below a key support level of $54,000 over the past 24 hours, giving many short-term investors a major cause for concern.

Despite this short-term volatility, however, a fascinating trend is unfolding beneath the surface. Interestingly, on-chain data reveals a large accumulation trend among long-term investors, with over $728 million worth of BTC being withdrawn from exchanges in the past week.

Huge BTC Withdrawals From Crypto Exchanges

On-chain data suggests that long-term investors are taking advantage of this dip by accumulating more Bitcoin. This interesting trend was spotted by IntoTheBlock, an analytics platform known for its in-depth tracking of on-chain data surrounding Bitcoin and other cryptocurrencies. According to IntoTheBlock, a total of $728 million in BTC was withdrawn from aggregated crypto exchanges throughout the entirety of last week.

In addition to this significant withdrawal figure, IntoTheBlock’s data points to a negative net inflow of 220.6 million into aggregated exchanges over the past seven days. This means that the volume of Bitcoin flowing out of exchanges far exceeds the volume flowing in, suggesting that more investors are withdrawing their assets from exchanges than depositing them. Interestingly, IntoTheBlock attributes the withdrawal trend to addresses holding between 100 and 1,000 BTC.

What does this mean for Bitcoin?

Exchange withdrawals are generally good for crypto assets because they reduce the amount of cryptocurrency that is readily available for sale. The more Bitcoin leaves exchanges, the scarcer the supply becomes, which can drive the price up.

While this accumulation trend signals strategic trades by a few large holders, it does not necessarily reflect the broader market sentiment surrounding Bitcoin at the time of writing. Despite the notable drawdowns, Bitcoin has struggled to meet investor expectations, with its price falling below key psychological levels. Bitcoin ended August with a disappointing negative price performance, falling 8.6% over the month.

Furthermore, this accumulation trend by large holders is offset by other worrying developments in the market, most notably the outflows from Spot Bitcoin ETFs based in the US. This comes as these ETFs closed the week on Friday with $169.97 million in outflows, bringing the streak of outflows to eight consecutive days.

This drop in inflows into Spot Bitcoin ETFs suggests growing bearish sentiment among institutional investors, who appear to be pulling funds out of these products. This, in turn, further complicates Bitcoin’s near-term price outlook.

At the time of writing, the Bitcoin price stands at $54,614 and there is still a risk of further decline.

Main image from PCMag, chart from TradingView