Bitcoin’s Quiet Boom: Stability Signals as Investors Withdraw

- Decrease in Bitcoin Market Leverage Ratio - Increase in Exchange Outflows, Highest Since 2022 [Unblock Media] Movements have been observed in the Bitcoin market where the leverage ratio is decreasing and the outflow of Bitcoin from exchanges is increasing. While this can cause short-term volatility, it is likely to contribute to market stability in the long run. According to the cryptocurrency data analysis firm CryptoQuant, the leverage ratio of Bitcoin has been continuously declining recently. A fall in the leverage ratio means that the proportion of investors trading on borrowed funds is decreasing, which can reduce excessive liquidation risks and enhance market stability. CryptoLion analyzed on November 21st, stating, "The decrease in the leverage ratio indicates a strengthened risk aversion sentiment." Along with the leverage ratio, Open Interest is also decreasing, suggesting that the overheating in the derivatives market is being resolved. A decline in Open Interest can be interpreted as a signal that speculative trading in the market is decreasing and investors are adopting more stable investment strategies. Additionally, Bitcoin outflows from exchanges have reached the highest level since 2022. CryptoQuant analyst Papi revealed, "The amount of Bitcoin withdrawn from exchanges last week alone accounted for 3% of the total supply." This level is similar to the period immediately after the FTX collapse in 2022. The reasons for the increase in exchange outflows are as follows: 1. Security concerns: Incidents like the collapse of FTX in 2022 and the HTX hacking in 2023 have increased investors' tendency to avoid exchange risks. 2. Trust issues with exchanges: Strengthened regulations and liquidity problems in some exchanges have led to an increase in the movement of assets to personal wallets or institutional custody services. 3. Strengthened long-term holding strategy: As investors choose long-term holding over short-term trading, the trend of withdrawing assets from exchanges for safekeeping is expanding. The increase in Bitcoin holdings by institutional investors also warrants attention. Recently, the volume of Bitcoin moving to Coinbase Prime has surged, analyzed to be used for supporting Exchange-Traded Funds (ETFs). In particular, the approval of Bitcoin spot ETFs in January 2024 is driving institutional investor inflows. BlackRock's iShares Bitcoin Trust attracted over $10 billion in assets within a month of its launch, demonstrating strong demand. This trend indicates that institutional investors are accumulating Bitcoin as part of a long-term holding strategy. The decrease in the leverage ratio, reduction in Open Interest, increase in exchange outflows, and expansion of institutional buying can increase short-term volatility. However, in the long run, these factors can promote structural improvements in the market and induce stable price increases for Bitcoin. Regarding this, Papi analyzed, "Large buyers are steadily accumulating Bitcoin during downturns. If this trend continues, Bitcoin is likely to transition to a healthier market structure."