Bitcoin is pouring out of exchanges amid its recent price resurgence.

Over the past three weeks, investors have pulled more than $10 billion worth of Bitcoin from crypto exchanges, Glassnode data shows — and that could prove super-bullish for the cryptocurrency.

Why? Because it may signal an impending supply squeeze, where vanishing inventory triggers upward price movement.

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So far, Bitcoin’s price doesn’t contradict the theory. Bitcoin has surged 24% in the last month and rose as high as $105,000 this week.

“Bitcoin’s move past $100,000 confirms the strength of the recovery and may set the stage for new all-time highs,” Bitfinex analysts said.

Dom Harz, co-founder of hybrid layer 2 network BoB, told DL News that Bitcoin’s trajectory is “undeniably upward.”

Indeed, the supposed supply squeeze comes on the back of market watchers like BitMEX’s Arthur Hayes and Standard Chartered’s Geoff Kendrick predicting that Bitcoin will skyrocket to $200,000 before the end of 2025.

Not everyone agrees with the supply squeeze narrative, however.

Bitcoin analyst James Check argues that the outflow data isn’t a vanishing act, but just accounting noise, and exchanges won’t run out of coins.

Much of the outflow is likely coins migrating between exchange-traded fund custodians and exchange cold wallets, as these entities reshuffle their balances, Check argued in a blog this week.

2.6 million coins

Check said the data, when filtered for wallet shuffling, showed that exchange balances have remained flat for the last five years.

Market data from CryptoQuant shows Bitcoin balance on exchanges peaked at 3.4 million coins in 2022 but has since declined to about 2.6 million coins worth $263 billion.

Still, Check said there isn’t any causal link between Bitcoin outflows and price booms.

“This happens every cycle,” Check wrote, and dismissed the supply squeeze claims as bullish folklore.

Mark Helfman, another Bitcoin analyst, called the supply squeeze narrative “a terrible myth” in a blog post last year. Helfman wrote that only a small fraction of Bitcoin transacted daily are withdrawn from exchanges.

Crypto market movers

• Bitcoin is down 1.6% over the past 24 hours to trade at $102,317.
• Ethereum is down 4.9% to trade at $2,552.

What we’re reading

Osato Avan-Nomayo is our Nigeria-based DeFi correspondent. He covers DeFi and tech. Got a tip? Please contact him atosato@dlnews.com.