Following Bitcoin’s third block halving on May 11, users removed 23,540 Bitcoins (BTC) from online exchanges. This appears to indicate heightened levels of confidence in the asset.

It also continues the recent trend of users moving their coins to wallets they control, and away from major centralized exchanges. In the two months since Black Thursday, the number of BTCs in exchange wallets has dropped from 2,634,574 to 2,332,524.

Bitcoin Net Exchange Flow versus Bitcoin Exchange Balances. Source: Glassnode.

User behavior

One might make a logical assumption that users withdrawing funds from exchanges is a bullish sign. If a user intends to sell their Bitcoin in the near future, it would seem counterintuitive to move assets away from an exchange. Instead, it’s possible that users are moving their coins to a non-custodial wallet for more secure, long-term storage. We can see that on March 12 — Black Thursday, exchanges saw one of the biggest inflows of Bitcoin on record. Users deposited nearly 40,000 coins in a 24 hour period. The trend has reversed as the price has recovered, with users withdrawing their assets from exchanges in droves.

Many key on-chain metrics point to a very healthy Bitcoin network. Hodlers may be betting on Bitcoin to appreciate as a result of the permanent drop in coin production.