Crypto investors seem to have stepped up bitcoin accumulation, shrugging off prospects of faster interest-rate hikes from the U.S. Federal Reserve.
Blockchain data provided by Glassnode shows that more than 18,000 bitcoin worth $670 million left centralized exchanges on Thursday, registering the biggest single-day net outflow in over a month. Crypto exchange BitMEX alone saw net outflow of over 9,500 bitcoins.
Most investors prefer to have direct custody of coins when they intend to hold them for a longer term. Thus, net outflows are widely taken to represent bullish sentiment.
Outflows do not necessarily imply passive investing and investors often tokenize coins drained from centralized exchanges on the Ethereum blockchain to earn extra yield. The number of wrapped bitcoin (wBTC) has increased by 13,000 this year, extending the year-long rising trend. WBTC is the first ERC-20 token backed 1:1 with bitcoin and represents the top cryptocurrency on the Ethereum network.
Whatever the case, increased outflows mean fewer coins available for sale on exchanges and a better chance of the market going up.
On Wednesday, the Fed, through the Federal Open Market Committee. set the stage for a more aggressive withdrawal of liquidity to tame high inflation. The Fed fund futures have now priced in five rate hikes of 0.25% each for 2022, up from four ahead of Wednesday's FOMC meeting.
Bitcoin and other risk assets with fortunes tied to centralized liquidity are likely to remain under pressure with the Fed focused on fighting inflation, analysts told CoinDesk.
At press time, bitcoin was trading unchanged on the day near $37,000.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.