Bitcoin ( BTC ) holdings on Coinbase crypto exchange have reached their lowest level in nine years as users move a significant chunk of their holdings off the exchange.

According to a CryptoQuant report , whales moved 18,000 Bitcoin worth nearly $1 billion off Coinbase over the weekend, with transfer values ranging from $45 million to $171 million. Coinbase’s public order book now holds around 394,000 BTC, which is estimated to be worth $20.5 billion.

Coinbase exchange netflow of BTC. Source: CryptoQuant

Whales moving their BTC holdings away from centralized exchanges is considered a bullish sign as it means less Bitcoin is available for sale. However, users on social media are currently divided over the nature of the transfer. Some believe these funds are being moved to custodial wallets in anticipation of a price surge, with the upcoming Bitcoin halving just two months away, creating a supply shock. While a few others believe that the moved funds could be used for liquidity for over-the-counter (OTC) trades.

Largest hourly #Bitcoin outflow in 2024 from Coinbase today: 18,746 Bitcoin moved in two transactions at the same block.

However, the transactions have all the patterns that would suggest:
- The Bitcoin is going into custody (input consolidation, new addresses being created… pic.twitter.com/FvH1wBXg1X

— Julio Moreno (@jjcmoreno) February 19, 2024

A few others said that the funds are possibly going to a different custodian, and these aren’t individual withdrawals as most of what’s in these exchanges “doesn’t belong to them anyways, so this number should be a lot lower.”

With every Bitcoin halving cycle, the amount of new BTC entering the market is reduced by half, creating a supply crunch as demand grows. The next BTC halving is scheduled for this April and is estimated to take place at a block height of 740,000. The block reward for each block mined by miners will be reduced from 6.25 BTC to 3.125 BTC. The latest halving also comes amid a huge institutional demand, with 11 spot Bitcoin exchange-traded funds (ETFs) approved in January.

Related: Grayscale’s GBTC outflows reach $7B, but data shows it’s slowing

Currently, around 900 BTC is mined daily, while Bitcoin ETF’s daily net inflow is about half a billion or about 9,650 BTC despite Grayscale registering nearly $100 million in daily outflow.

Post-April halving, the daily amount of BTC produced will be reduced to about 450 BTC, with institutional demand continuing to rise. This massive supply-demand gap has historically proven bullish for Bitcoin price as BTC has risen to new all-time highs within a year of the BTC halving.

Bitcoin price is currently trading at over $52,000, its highest since December 2021 and only down 25% from its all-time high of around $69,000.

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