Bitcoin Withdrawal of 4.85M BTC Signals Potential Supply Squeeze

January 30, 2025 by Bena Ilyas

• Since 2020, nearly 5 million BTC have been withdrawn from centralized exchanges, indicating strong investor accumulation.
• The outflow has reduced Bitcoin’s available supply, which could trigger a price rally due to lower selling pressure.
• While some predict a short-term price drop, others are optimistic about a long-term surge, with projections of Bitcoin reaching $250K by year-end.

Bitcoin [BTC] is still squarely in the center of all eyes, as the largest cryptocurrency is in a strong accumulation phase, even as prices have seesawed from $91,000 to $105,000. The pattern of this accumulation is suggestive of growing investor confidence once the volatility takes its course.

According to Joao Wedson, the founder of crypto analytics firm Alphractal, this data shows an amazing transition of investor behavior. Wedson said that close to 5 million BTC have been withdrawn from centralized exchanges since the year 2020, which proves the strong holding strategy going on between market participants. He said.

“4.85M BTC have left exchanges since February 2020! The Exchange Flux Balance shows a massive shift. Since 2020, the game has changed—everyone wants Bitcoin at all costs.”

This has been an unprecedented outflow from the exchanges, improving supply conditions of Bitcoin available to be traded. A so-called “supply squeeze,” this lowered selling pressure could well open the way for a sharp rally in price. Investors are locking up their BTC, reducing the number of coins available for sale on centralized platforms.

From $97K to $100K, Bitcoin Shows Strong Recovery

Adding to this saga, blockchain analytics firm IntoTheBlock just saw another similar short-term trend. For seven consecutive trading days, the data published by the firm indicates negative flows on the exchange, an indicator of relentless accumulation. IntoTheBlock stated,

“Bitcoin exchange flows have been negative since the 21st of Jan, hinting at ongoing accumulation.”

During this period, Bitcoin has shed a steep 7% from $109,000 to plunge all the way to $97,000. From there, though, it rebounded back to the $100,000 mark at press time. The price dip saw some strong buying interest as investors took advantage of the opportunity to grab some BTC at lower prices.

Other metrics further supported the bullish outlook. For example, CryptoQuant’s analysis suggested that the taker sell volume on Binance, one of the biggest digital asset exchanges, had plummeted. This signifies a weakening dynamic by the sellers of shorts. CryptoQuant’s report said:

“As the influence of sellers diminishes, buyers may step in, potentially leading to a new upward wave.”

While the accumulation trend tends to support the case for a possible price surge, the broader market’s direction may be at the mercy of external factors. For example, the impending interest rate decision by the United States Federal Reserve may prove to be a major factor in investor psyche and market conditions.

Interestingly, not all experts think the same way. Arthur Hayes is the co-founder of BitMEX. He told us about how things may turn around. Hayes predicted a marginal fall of 30% in near term that will send the price of BTC to the $70,000-$75,000 range. However, he affirms the long-run forecast by saying a surge to $250,000 at the end of the year.

Bitcoin’s current trajectory is painting a very interesting picture: strong accumulation versus reduced selling pressure, short-term volatility, and contrasting opinions of experts. Be it the surge of the king coin to new highs or a temporary correction, one thing is certain: investors’ interest in Bitcoin remains quite strong, making it a linchpin in the cryptocurrency market.

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