The balance of bitcoin in cryptocurrency exchanges has been declining since the past few weeks, as shown in the data “glass“.

There appears to be an increased demand for bitcoin piling up on exchanges, a trend that raises questions about where this money is going.

Bitcoin has had a turbulent year, and the current balance on exchanges reached a new low at 13% of circulating supply this week.

This level has not been seen since February 2018 as the bitcoin price was hovering around $6000 to $10,000.

According to Glassnode, the tipping point that defined the current valuation of bitcoin began in the wake of the massive market crash in March 2020, as the price of bitcoin fell to $3,800.

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The crash at that time affected the financial market, and gave a number of institutional investors the necessary impetus to consider investing in the first cryptocurrency.

The adoption of institutional investors has pushed the price of Bitcoin to a high of $64,000.

The trend of current Bitcoin outflows from exchanges reflects the imbalance in the negative net outflow (outflows) reading for crypto exchanges this week, with current Bitcoin outflows occurring at a rate of -92K BTC/month.

According to Glassnode data, the market has clearly shifted to a post-March 2020 model.

Where do bitcoins exit from the exchanges go?

Cryptocurrency exchanges are usually the main way in which ordinary people buy their bitcoins, and many often use exchange wallets to hold the purchased cryptocurrencies.

Glassnode indicated that bitcoins exiting the exchanges go to investors’ wallets.

As stated in the “Glassnode” report:

In general, the net trading platform balance continued to decline as the inflows observed in May were absorbed by the market and shifted to investors’ portfolios.

In addition, the introduction of custodial services, warehousing and cold wallets is on the rise.

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The use of offshore digital wallet services usually provides a certain level of confidence to investors, as the funds are remarkably safe from exploitation by cybercriminals, which could explain the movement of Bitcoin out of the trading platforms towards offshore wallets.

Overall, there was modest profit-taking among investors in the past week, which also contributed to the influx of Bitcoin from the trading platforms.

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