Crypto exchanges recorded a net outflow of 22,550 BTC on Monday June 7, 2021. According to Glassnode, a blockchain analytics company tracking Binance, Coinbase, and Kraken, this was the largest single-day net drain since November 2, 2020.
With the current price of Bitcoin almost 50% lower than its all-time high, bullish traders are awaiting a fresh data point that might suggest the market is nearing a bottom: a surge in outflows of the cryptocurrency from exchange platforms.
Even though it may be too early to predict whether the drain will be sustained, data shows that some traders are satisfied with the current price and don’t intend to liquidate their BTC on the exchanges. Based on the logic of cryptocurrency markets, traders may be moving their crypto assets to custody, wallets, or cold storage while waiting for the price of BTC to rebound.
“The outflow can best be described as multifaceted, bordering on HODLing, and the use of the digital currency in decentralized finance,” said Petr Kozyakov, co-founder and CEO of Mercuryo, a global payment network.
The number of BTC kept in exchange wallets fell from 2.56 million to a three-week low of 2.54 million.
Kozyakov also added that investors seem to be storing their assets in cryptocurrency wallets expecting that the current drop in price will balance out and ultimately exceed its previous all-time high.
To try to increase their yield, some investors employ the strategy of taking direct custody of Bitcoin and tokenizing the coins on the Ethereum blockchain. The concept of tokenization refers to locking up Bitcoin on Ethereum and issuing a corresponding number of tokens tied to its price. Subsequently, the tokens can be deposited in decentralized finance borrowing and lending protocols.
Bitcoin is currently trading near $37,000. The price dropped by 35% in May as a result of China’s regulatory crackdown and environmental concerns.