Bitcoin’s exchange withdrawals have climbed to their highest sustained level since 2022, even as the asset trades near record highs.
While current outflows remain below the 2023 accumulation peak, the renewed withdrawal trend highlights a behavioral shift in how investors gain exposure to Bitcoin.
Institutional demand increasingly flows through spot exchange-traded funds (ETFs) rather than direct purchases, leaving retail holders as the main force behind on-chain accumulation.
Bitcoin netflows at multi-year lows
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the 14-day Simple Moving Average (SMA) of Bitcoin exchange netflows has moved past neutral territory, with 7,500 BTC withdrawn over the past two weeks.
That figure represents a steep decline from the 20,000 BTC weekly outflows recorded during the 2022–2023 accumulation cycle, exacerbated by the FTX collapse. Yet, a higher level than at any time during the 2021 bull run.
Still, CryptoQuant analyst OnchainSchool explained that current withdrawals signal rising investor confidence in the flagship digital asset. The analyst said:
“This trend unfolds despite Bitcoin recently hitting a new all time high, indicating that investors are withdrawing coins from exchanges even as prices remain elevated. Such behavior typically reflects confidence in long term value and a decline in short term selling pressure, reinforcing the view that large holders continue to accumulate rather than distribute.”
Strong exchange outflows can coincide with bullish phases, as investors transfer their coins into cold storage to signal long-term conviction.
However, during the initial run-up in 2021, fewer holders withdrew to self-custody, leaving more liquidity on centralized exchanges. Once the first top was in, investors began sending coins to exchanges at record rates.
Net withdrawals didn’t reach the levels we see now until FTX collapsed two years later.
Last cycle saw a softer supply squeeze, which tends to limit near-term upside pressure even when demand remains strong.
This time, we have coins leaving exchanges at unprecedented levels when Bitcoin is in a price discovery phase.
ETF inflows absorb supply
The withdrawal pace highlights a significant behavioral shift for investors, who increasingly opt for ETF exposure over direct Bitcoin ownership. On the other hand, retail traders appear more willing to remove their assets from exchanges, perhaps even migrating them into ETFs.
As a result, short-term BTC holders’ unrealized profit has risen to 10% amid the digital asset’s price above $126,000 on Oct. 6, which coincided with surging institutional inflows into US spot Bitcoin ETFs.
According to SoSoValue data, the 12 US-listed funds recorded roughly $1.2 billion in inflows that day, marking their second-largest single-day gain since launch.
Since early September, cumulative inflows have topped $5 billion, highlighting the deepening role of traditional finance in Bitcoin’s liquidity ecosystem.
Bitcoin analyst Shaun Edmondson remarked:
“These purchase figures from the US Spot BTC ETFs are utterly insane, both yesterday and the 5 business day rate. These are truly eye watering numbers.”
These ETF vehicles now collectively hold more than 1.3 million BTC, functioning as the dominant channel for institutional accumulation.
In earlier bull cycles, comparable inflows would have gone onto exchanges for sale, cold storage, or DeFi protocols. Today, they are flowing into regulated, custodial products, somewhat reducing the scarcity effect that once intensified price surges.
This emerging balance, robust ETF demand offset by weaker on-chain accumulation, has made Bitcoin’s current rally appear more orderly than in previous cycles. Still, macro headwinds such as US budget tensions and shifting rate-cut expectations could quickly alter the flow conditions.
If ETF inflows persist, they could absorb up to twice the volume of Bitcoin’s daily issuance, reviving upward momentum even without major exchange withdrawals. But if inflows slow while some liquidity remains on exchanges, the familiar “supply squeeze” narrative may remain dormant through year-end.
Should outflows increase in pace further alongside strong ETF inflows, a supply squeeze could hit ‘god candle’ levels before the end of 2025. we