More Bitcoin (BTC) left exchanges as outflows, sets a yearly record

Despite the price weakness of Bitcoin (BTC), withdrawals from exchanges reached a yearly record. The shift signals another round of the usual flow of BTC toward whale wallets that aim to control as many coins as possible for long-term storage. 

During the latest Bitcoin (BTC) slide under $100,000, buyers still took coins off exchanges. On February 5-6, BTC had another intraday dip, but traders took 17,000 BTC out of the market. The outflow follows a similar large-scale withdrawal from February 3.

Exchange outflows are now rivaling the spring of 2024, where shakedowns and accumulation moved more retail funds into whale wallets. The most recent outflow round combines the overall withdrawals from spot and derivative exchanges. However, each individual market had its own withdrawal profile, as some markets like Binance retained their baseline equilibrium. 

The most recent withdrawal affected Coinbase the most, with 15,000 BTC flowing out into self-custodial wallets. The recent withdrawal wave follows the trend of concentrating BTC into the wallets of US investors. The concentrated withdrawals may belong to whale buyers or be part of the recent ETF accumulation. 

Coinbase Pro, which holds BTC on behalf of large-scale clients, saw another 7,828 BTC withdrawals in the past 24 hours. Kraken sent out 44,854 BTC in the past week, also becoming the exchange with the biggest monthly outflows.  

Bybit was among the exchanges with the most significant BTC deposits. Overall, the market still trades in the post-election hype zone, though BTC is beginning to move in a range around $100,000, with periodic recoveries above that level. 

Retail investors may face capitulation at levels under $95,000 and as low as $87,000, based on this cycle’s buying behaviors. BTC is still deployed strategically, as whales continue to take profits and buy the dip, while retail traders often panic-sell. 

Accumulation wallets expand their balance

In the past years, BTC has had a clearer investment strategy. Around 1.8M coins are known to be held in miner wallets. Another 3.03B is in corporate treasuries, while accumulation wallets hold a total of 2.7M. The inflow to those self-custodied wallets has not slowed down, even with the recent dip of BTC as low as $91,000. Some of the accumulation wallets may also absorb repeated transactions.

Some of those wallet classes may overlap, but the general trend is for entities to hold onto their coins, not rushing to move into other assets. BTC is seen as having a unique value proposition, and investors aim for self-custodial control. 

Accumulation addresses, holding more than two non-dust transactions, have rapidly expanded in the past months, tracking the rally of BTC over $100,000. The creation of new wallets reflects a shift from older whales to new buyers, with more BTC held in wallets built 1-3 months ago. 

The supply of BTC held in long-term storage, with a wallet age above 150 days, is now decreasing to the levels of September 2021. Market peaks and rapid trading continue to cause a shift in ownership, as retail buyers are still fearful that the bull cycle is already unwinding.

Will BTC go for a short squeeze? 

The recent shift toward whale holdings shows that spot BTC holders are not anywhere near capitulation levels. Some of the smart money whales took profits at a higher price range and then continued their accumulation. 

Based on the updated liquidation heatmap, the biggest accumulation of short positions is at the $98,000 level. BTC traded below that range, at $97,482.93, sparking expectations of a rapid short squeeze to attack those positions. 

BTC may also be more volatile ahead of the weekend after a relatively small options expiry event on Friday. A total of $3.1B in BTC and ETH options are expiring on Friday, which may cause price swings. For BTC, the maximum pain point is at $99,500, though whales may only have hours to attempt a short squeeze to that level. 

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