The massive Coinbase outflows totaling $1.2 billion last week demonstrate the active engagement of institutions. Large institutional investors are beginning to feel more at ease with Bitcoin, and they are pouring millions of dollars into the asset class.
Over the course of the past couple of years, several of the world’s largest and most well-known financial institutions have gained exposure to Bitcoin.
Institutional Demand for Bitcoin Continues
Retail investors appear to have lost interest in Bitcoin as a result of the prolonged whipsawing. Institutional investors, on the other hand, tend to have a long-term perspective and are not concerned with short-term gains.
According to the statistics given by the on-chain analytics tool Glassnode, the lack of retail attraction is accurate. To be specific, during the previous week, an eye-watering 31,130 Bitcoin — valued at about $1.2 billion — was transferred away from the Coinbase exchange. This is the greatest net outflow recorded since the beginning of 2017. It is a signal that investors now see bitcoin (BTC) as a new legitimate investment asset of significance.
The enormous influx of users has resulted in a significant reduction in the overall amount of bitcoins stored on the San Francisco-based exchange, which is now around 650,000 BTC. This is the same level as it was during the zenith of the bull market in 2017. In addition, Coinbase’s overall bitcoin holdings have fallen by 36.6 percent since reaching a record high in April 2020, according to the company.
A third point made in the Glassnode study is that such huge outflows are part of a continuous pattern with regard to Coinbase balance. Furthermore, being the largest publicly listed US-based exchange as well as the largest crypto exchange in terms of bitcoin reserves, this lends credence to the hypothesis that bitcoin is being accepted as an asset by significant institutional customers.
When Liftoff?
The Illiquid Supply Shock Ratio (ISSR) has experienced a significant increase during the previous week. In other words, the coins that have been relocated have really been transferred to wallets with no history of being used.
Since November, the cryptocurrency market has seen unprecedented volatility with the price of bitcoin dropping from an all-time high of $69K to nearly half of that amount in less than four months, sparking an increase in feelings of fear, uncertainty, and doubt.
Nonetheless, it is evident that institutional adoption of Bitcoin as a fundamental piece of the global financial system is continuing to grow at an exponential rate. The adoption of Bitcoin continues to gain momentum, and institutions continue actively engaging in the market.
Better get your sats before the whales do.
