Bitcoin Reserves on Coinbase Drop to Lowest Level in Nine Years as Whales Transfer 18,000 BTC Off the Platform
The Bitcoin reserves on the Coinbase exchange have dropped to their lowest level in nine years, following significant movement of holders transferring a large portion of their assets off the platform. According to a report by CryptoQuant, over the weekend, whales moved 18,000 BTC, worth nearly a billion dollars, out of Coinbase, with transfer values ranging from $45 million to $171 million. Currently, Coinbase’s public order book holds approximately 394,000 BTC, estimated at $20.5 billion.
OTC Buying Orders or Bitcoin Spot ETFs?
The reason behind these massive transfers remains unclear as various propositions are put forth in the community. Some believe that the funds are being moved to custody wallets in anticipation of a price increase, with Bitcoin’s upcoming halving, which is just two months away, creating a supply shock. Others think that the transferred funds could be used for liquidity in over-the-counter (OTC) transactions.
Impact of Halving on Supply and Demand
With each Bitcoin halving cycle, the amount of new BTC entering the market is reduced by half, creating a supply shortage as demand increases. The next BTC halving is set to happen in April. The block reward for each block mined by miners will be reduced from 6.25 BTC to 3.125 BTC. This halving also takes place in the context of massive institutional demand, with 11 approved Bitcoin Spot ETFs in the United States in January.
Currently, approximately 900 BTC is being mined daily, while the daily net inflows of Bitcoin ETFs are around half a billion dollars, equivalent to about 9,650 BTC, despite daily outflows of nearly $100 million recorded by Grayscale.
After the April halving, the daily quantity of BTC produced will be reduced to around 450 BTC, with institutional demand continuing to increase. This significant gap between supply and demand has historically proven to be a bullish factor for the price of Bitcoin, with new all-time highs reached in the year following the halving.
Bitcoin is currently trading around $52,000, its highest level since December 2021, down 25% from its historical peak of around $69,000.
