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Bitcoin Leaving Major Exchanges—Is a Supply Squeeze Coming?

After Easter Sunday, the cryptocurrency market stirred back to life, with Bitcoin leading the rally, climbing nearly double digits. Now trading above $94,000, Bitcoin's momentum appears to be cooling off.

In recent days, large amounts of BTC have been withdrawn from major centralized exchanges, fueling investor optimism about the rally. Here’s a closer look at the recent movements:

On Friday, April 25, Binance recorded a withdrawal of 27,750 BTC—equivalent to $2.63 billion at current prices—according to CryptoQuant. This marks the third-largest net outflow from the exchange in its history.

The shift of significant Bitcoin holdings from centralized exchanges to non-custodial wallets suggests changing investor sentiment and strategies. Large outflows typically signal growing confidence in Bitcoin’s long-term value.

Analyst Wedson cautioned that while heavy outflows don't guarantee a price increase, they often reflect rising institutional activity—a trend that often precedes heightened market volatility. He also pointed out that substantial outflows didn't prevent Bitcoin’s price drop during China's 2021 crypto crackdown.

Drawing parallels to the FTX collapse, Wedson highlighted that prolonged Bitcoin withdrawals had previously preceded a market bottom and a recovery. He recommended monitoring netflow trends over multiple days rather than focusing on single-day data.

Large withdrawals are often seen as signs of institutional or major investor accumulation, hinting at growing bullish sentiment.

Wedson added that if declining exchange reserves align with rising spot market demand or increased ETF inflows, a supply crunch could emerge, potentially driving Bitcoin’s price even higher.