Bitcoin’s exchange withdrawals have reached their highest sustained level since 2022, despite the asset’s near record highs. This trend indicates a shift in investor behavior towards gaining exposure to Bitcoin. While current outflows are lower than during the 2023 accumulation peak, the renewed withdrawal trend suggests a change in how investors are interacting with the digital asset.
Data from CryptoQuant shows that the 14-day Simple Moving Average (SMA) of Bitcoin exchange netflows has moved past neutral territory, with 7,500 BTC withdrawn over the past two weeks. This figure is lower than the outflows seen during the 2022-2023 accumulation cycle but higher than any time during the 2021 bull run. Analysts believe that the current withdrawals signal rising investor confidence in Bitcoin’s long-term value.
The increased exchange outflows can be a bullish sign as investors move their coins into cold storage, indicating long-term conviction. During the 2021 bull run, fewer holders withdrew to self-custody, leading to more liquidity on centralized exchanges. However, with the current trend of coins leaving exchanges at unprecedented levels during a price discovery phase, we may see a different dynamic this time around.
One significant shift in investor behavior is the preference for ETF exposure over direct Bitcoin ownership. Retail traders are increasingly moving their assets from exchanges, possibly into ETFs. This shift has led to a rise in short-term BTC holders’ unrealized profit to 10% as the digital asset’s price surpasses $126,000. Institutional inflows into US spot Bitcoin ETFs have surged, with $1.2 billion in inflows recorded in a single day.
These ETF vehicles now collectively hold more than 1.3 million BTC, becoming the dominant channel for institutional accumulation. In previous bull cycles, similar inflows would have gone to exchanges for sale or storage, but today they are flowing into regulated, custodial products. This balance of robust ETF demand offset by weaker on-chain accumulation has made Bitcoin’s current rally appear more orderly.
If ETF inflows continue, they could absorb a significant portion of Bitcoin’s daily issuance, potentially reviving upward momentum. However, if inflows slow while liquidity remains on exchanges, the supply squeeze narrative may not materialize as strongly. Overall, the current trend of increased exchange withdrawals and strong ETF inflows could lead to a supply squeeze with significant price movements before the end of 2025.