As the Bitcoin price continues to seek higher highs, there needs to be some market development to keep traders excited. An increase in exchange outflow is usually an excellent place to start. Fewer BTC on exchanges can often drive up the prices, although it is not a foolproof metric by any means.

Bitcoin Exchange Outflow Increases Sharply

When the value of Bitcoin rises, there are more incentives for users to sell the worldś leading cryptocurrency. Although most enthusiasts would like to think otherwise, Bitcoin is still considered a speculative asset first and foremost. Thus, people buy BTC, hold on to it until their desired price target, and liquidate their holdings. That method has been prevalent for years and may never go away again.

Thankfully, there are now hundreds of use cases for Bitcoin as a payment option. However, not all BTC holders will explore these options, as paying for goods and services through cryptocurrencies remains a somewhat problematic endeavor. Moreover, global merchant adoption is still low, which doesn’t warrant an increase in exchange outflow right away.


Source: Glassnode

Interestingly, that exchange outflow is now at a one-month high. It is a sign of traders moving funds off trading platforms for a variety of reasons. Few will use it as a payment method but instead store it in their wallet directly. There is no reason to keep funds on an exchange unless for trading and speculative purpose. All other funds are better off being withdrawn permanently. 

Thanks to this one-month high exchange outflow, there is a chance the Bitcoin price might keep rallying. Making it harder to obtain BTC will usually send the price higher, although that is not a guaranteed outcome. However, it does signify that many people have no intention of selling at the current price level, no matter whether they are profitable. That is a bullish sign for the broader industry and may lead to even more all-time highs over the coming weeks. 

Most BTC Funds Leave Huobi

It is equally important to figure out where this increased exchange outflow originates from. Usually, a few exchanges note significant BTC withdrawals, resulting in such a high outflow. However, this past month, things have been a bit different. There is only one exchange with a massive discharge, which is Huobi.

Source: Viewbase

For reasons unknown, Huobi has a negative flow of over 38,000 BTC. A substantial amount and one that traders will not see all that often. The funds removed from Bitfinex, bitFlyer, and CoinCheck help move this metric in the right direction. None of the exchanges note any increasing deposits besides Binance, but that is par for the course.  Even so, these developments can prove beneficial to the current Bitcoin price momentum.