Bitcoin worth $1.2 billion just left Coinbase as price surges

‘The potential energy for a capitulation event is there,’ analysts note

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More than a billion dollars worth of bitcoin has been removed from one of the world’s leading crypto exchanges, marking the highest single-week outflow in nearly five years.

The $1.2 billion that left Coinbase comes amid a resurgent cryptocurrency market – the price of bitcoin is up over 7 per cent over the last week – and could signal a significant increase in institutional accumulation and adoption.

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Bitcoin continues to trade within a relatively tight window between $34,000 and $44,000, which it has traded between since the beginning of the year.

The movement of funds, tracked by blockchain analytics firm Glassnode, saw 31,130 BTC leave the Nasdaq-listed cryptocurrency exchange, pushing Coinbase’s balance to a four-year low of 649,500 BTC.

Despite the dwindling supply, there is still the potential for a “capitulation event” that could see the price of bitcoin crash in a similar way to previous market cycles.

“The market currently exists in a delicate balance, amidst a backdrop of high macro and geopolitical uncertainty playing out on the global stage,” Glassnode notes in its weekly report.

“We are now two years on from the major capitulation event in March 2020 that saw bitcoin prices plummet over 52 per cent, fall from $8,000 to $3,800 in two trading days, and marked the end of the 2019-20 bear cycle. Capitulation events like this often signify a complete and total flush out of all remaining sellers, turning the tides in the favour of the bulls.”

Just over 10 per cent of the active bitcoin supply is held on major cryptocurrency exchanges like Coinbase, with the rest held in either hot wallets connected to the internet and ready to be spent, or in cold storage for the purpose of saving. There is also a significant proportion of the 21 million bitcoins that will ever exist that are inaccessible doe to the owners losing their access codes or dying without passing them on.

“With over 2.51m BTC held by short-term holders at an unrealised loss, there remains a risk that sellers have not yet been fully exhausted,” Glassnode noted.

“The ‘potential energy’ for a capitulation event is there, and such an event would be consistent with all prior bear cycles. However, HODLing [refusing to sell] does continue to dominate investor behaviour, and the longer-term accumulation trends are still impressively constructive.”