Bitcoin’s (BTC) price surpassed the important $42,000 mark on April 21, as the commodity progressively climbed over resistance levels after a short test of support below the $40,000 mark only a few days earlier.
One factor that might indicate a price movement in either direction is the amount of money pouring out of and into cryptocurrency exchanges, and Bitcoin has recently witnessed a big outflow from these platforms.
Notably, on April 14, Bitcoin suffered its highest outflow from exchanges in five weeks, with up to 25,878 or $1.04 billion BTC departing in less than 24 hours. As a result, Bitcoin spot exchange reserves have fallen to their lowest level in over four years, according to statistics released on April 21 by Crypto Quant.
The platform for on-chain data tweeted: “Bitcoin Spot Exchanges’ Reserves fall to a more than four-year low.” According to historical statistics, if a trend persists for a few days, big volumes of Bitcoin leaving exchanges lead prices to rise.
Santiment, an on-chain and social analytics platform, originally stated: “Historically, big amounts of BTC leaving exchanges result in price increases if the trend holds for a few days.”
Bitcoin migrating out of exchanges is often seen as a good trend in the crypto sector for two reasons. The trend implies that Bitcoin owners are no longer keen to sell their coins for a number of reasons, preferring instead to ‘HODL.’
Additionally, this means that there are fewer BTC available on the market for whales to dump, and liquidity is dwindling as a result of the overall shortage of Bitcoin.
Keeping your own keys is a basic rule of Bitcoin assets, and the trend may also signal that users are taking this advice more seriously in the present situation.