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The recent surge in BTC withdrawals from centralised exchanges suggests that the Bitcoin markets may be in a state of accumulation.
Since late May, the quantity of Bitcoin held on centralised exchanges has steadily declined, with around 2,000 BTC (worth approximately $66 million at current rates) moving out of exchanges everyday.
According to Glassnode’s July 12 Week On-Chain report, Bitcoin balances on centralised exchanges have plummeted to levels not seen since April, when BTC reached an all-time high of over $65,000.
The researchers noted that during the bull run leading up to this peak, relentless depletion of exchange coin reserves was a key theme. According to Glassnode, a large portion of this BTC went to the Grayscale GBTC Trust or was stockpiled by institutions, resulting in “a persistent nett outflow from exchanges.”
When Bitcoin prices fell in May, however, this pattern reversed as coins were moved to exchanges for liquidation. As outflows grow, the nett transfer volume has returned to a negative level.
“On a 14-day moving average basis, the last two weeks in particular have seen a more positive return to exchange outflows, at a rate of ~2k BTC per day.”
The report also noted that the proportion of on-chain transaction fees represented by exchange deposits declined to 14% dominance this past week, following a brief peak to around 17% in May.
On-chain fees associated with withdrawals saw a notable bounce from 3.7% up to 5.4% this month, suggesting an increasing preference for accumulation over sales, it added.
The fall in exchange reserves appears to have coincided with an uptick in capital flows to decentralized finance protocols over the past fortnight.
According to DeFiLlama, the total value locked has increased by 21% since June 26 as it climbed from $92 billion to $111 billion.