Despite Bitcoin (BTC), dropping below $43,000 on Monday, the outflow from exchanges continued in a multimonth trend, especially on Coinbase Pro.
Coinbase 4-hour candle chart for BTC/USD, Coinbase Source: TradingView
The amount of Bitcoin in Coinbase Pro vaults has dropped by 28843.87 BTC over the past month. Similar to Coinbase Pro, Bitfinex, OKEx and Kraken also saw a decrease in Bitcoin holdings. The total amount withdrawn was 30,236 BTC.
Bitcoin balance on Coinbase Pro Source: Bybt
According to On-chain analysts, falling Bitcoin reserves is a bullish sign.
This is because traders only move their BTC assets onto exchanges when they want to trade them for fiat currencies or other altcoins. The exchange balance is used to gauge traders’ feelings about the underlying asset.
Coinbase Pro’s falling Bitcoin reserves suggest that its traders intend to hold BTC rather than sell it. Binance has also been spoilsporting Coinbase Pro’s top rival.
Binance BTC reserves defy the trend
Data also shows that Binance’s Bitcoin balance has increased to 29,717 BTC over the past 30 days. This is more than Coinbase Pro drew from their vaults.
Binance Bitcoin balance Source: Bybt
Binance is the largest crypto exchange in the world by volume and has a significant influence on the market because of its global reach. Its growing Bitcoin balances indicate that users could sell more Bitcoin, which is the opposite trend of Coinbase.
Binance’s Bitcoin reserves increased to levels that were consistent with market sell-offs in the second quarter 2021. The Bitcoin balance on Binance jumped from 199.700 BTC on April 20, to 347.590 BTC June 26.
Binance Bitcoin balance between April 20th and June 26th Source: Bybt
BTC/USD dropped from $65,000 to $30,000 during the same period, with Bitcoin plummeting by over 30% after the May 19 crash.
Bitcoin trading at $300 Premium on Binance
The huge rise in Bitcoin reserves on Binance coincided also with premium BTC/USD biddings on the exchange. Binance’s BTC spot price was almost $400 higher than Coinbase’s.
Prices of Bitcoin on Binance vs. Coinbase Source: TradingView
This huge price differential created arbitrage trading opportunities. It coincided with Binance’s Bitcoin reserves increasing by 1,529 BTC in 24 hours, compared to Coinbase which processed withdrawals of 579 BTC.
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Recall that exchanges processed more than 35,000 BTC in withdrawals over the past 30 days. This indicates that traders wanted to keep their crypto and not sell it.
However, Binance’s trading volume ($24 Billion) during the 24 hour prior to press time was six times greater than Coinbase Pro ($4.23 Billion) — according to data from CoinMarketCap — so the possibility of an interim Bitcoin price fall seemed high.
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