Bitcoin Holdings on Coinbase Hit Nine-Year Low Ahead of Anticipated Halving Event
Summary:
Coinbase, a major cryptocurrency platform, is experiencing its lowest Bitcoin holdings in nearly ten years as users move their assets off the exchange. This shift, which involves about 18,000 Bitcoins, is believed by some to be in anticipation of a Bitcoin halving event scheduled for April, which will reduce the supply of Bitcoin. Others speculate it could be to provide liquidity for over-the-counter trades. The current Bitcoin price is over $52,000 and is only down by 25% from its record high.
Cryptocurrency powerhouse Coinbase is witnessing the lowest Bitcoin (BTC) holdings on its platform in nearly a decade, as users substantially shift their BTC off the digital exchange. As revealed in a report by CryptoQuant, over the weekend, crypto whales transferred approximately 18,000 BTC, equivalent to nearly $1 billion, off Coinbase, with individual transfers ranging from $45 to $171 million. The public order book of Coinbase now holds an estimated 394,000 BTC, equivalent to a staggering $20.5 billion.
The trend of crypto whales shifting their BTC from centralized exchanges to elsewhere is typically seen as a positive indicator, implying a lower volume of Bitcoin available for sale. However, this massive transfer has left the crypto community divided. Some speculate that the funds are being relocated to custodial wallets in preparation for a possible surge in prices, especially with the Bitcoin halving event just a couple of months away, which will cause a supply crisis. Others hypothesize that these moved funds might facilitate liquidity for over-the-counter (OTC) trades.
There are others voicing that these funds could be moving to alternate custodians, arguing they are not individual withdrawals and since most funds in these exchanges are not in private ownership, the number should logically be smaller.
With each Bitcoin halving cycle, the fresh supply of BTC entering the market is halved, resulting in a supply shortage as demand continues to grow. The upcoming BTC halving, slated for this April, is expected to happen at a block height of 740,000. After the halving, the reward for each mined block will dwindle from 6.25 BTC to 3.125 BTC. This imminent halving is set against the backdrop of soaring institutional demand, with 11 spot Bitcoin exchange-traded funds (ETFs) sanctioned just in January.
Today, nearly 900 BTC is mined daily, while Bitcoin ETF’s daily net investment is about half a billion or close to 9,650 BTC, in spite of Grayscale recording nearly $100 million in daily outflow. Post the April halving event, the daily supply of BTC will drop to roughly 450 BTC, while institutional demand is projected to surge. Historically this huge supply-demand imbalance has proven to be beneficial for Bitcoin price; after each BTC halving, BTC has surged to record new highs within a year.
Bitcoin’s current trading price has tipped over $52,000, marking its highest since December 2021, and only a 25% drop from its record high of $69,000.
Published At
2/20/2024 11:20:35 AM
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