The trend toward users withdrawing their assets from centralized exchanges has gained momentum since Black Thursday. However, the amount of Bitcoin they removed yesterday is outstanding even within the context of this trend — $265 million worth.
Bitcoin daily exchange net flows. Source: Glassnode.
Hodling logic explained
On March 19, users withdrew 31,000 BTC ($198 million), and then on March 24, another 27,000 BTC ($180 million). The price of Bitcoin on March 18 was $5,238. By May 7, it had shot up to $9,892.
What could be the correlation or even causation between users withdrawing funds from exchanges and the price of BTC? If a user expects to sell their Bitcoin in the near future, they will keep it on an exchange.
$18,000 by August?
Conversely, if the same user expects price appreciation, they are more likely to withdraw their funds to a noncustodial wallet for better long-term safekeeping. As more Bitcoin leaves the short-term supply, price tends to appreciate, provided that demand stays the same.
However, in markets, there is always more than one factor that is affecting the price.
Bitcoin seven-day average exchange net flows. Source: Glassnode.
Examining the seven-day average for the same metric since Black Thursday, it has barely peaked above the waterline. This would indicate long-term hodling sentiment on the part of crypto investors.
If we were to experience the same appreciation as last time, then the price of Bitcoin would reach $18,000 by the end of July. This would align with recent predictions from Bloomberg.