Forbes India 15th Anniversary Special

Bitcoin price surge spurs asset outflows from crypto exchanges

The overall crypto market capitalisation has surged by over 7.3 percent in the last 24 hours, reaching $1.25 trillion, its highest valuation since April

Shashank Bhardwaj
Published: Oct 25, 2023 08:41:24 PM IST

Bitcoin price surge spurs asset outflows from crypto exchangesImage: Shutterstock

Bitcoin price surge has triggered substantial asset outflows from major crypto exchanges. This development is seen as a bullish sign, reflecting traders' confidence in Bitcoin's continued upward trajectory. The movement of funds away from exchanges and into secure storage suggests that traders anticipate further price increases.

According to data provided by crypto analytics firm CoinGlass, Binance witnessed the largest outflow, with over $500 million leaving the exchange within the past 24 hours. This trend was followed by crypto.com, recording $49.4 million in outflows, and OKX, with $31 million. Most other exchanges saw outflows of less than $20 million.

These outflows are seen as a strong indicator of trader sentiment rather than fear-driven withdrawals, as witnessed during the peak of the bear market. Data from Glassnode confirms that the outflows align with Bitcoin's recent price surge.

In response to the price surge, approximately $400 million worth of short positions were liquidated in the last 24 hours. A total of 94,755 traders experienced the liquidation of derivative positions, with the largest single liquidation order, worth $9.98 million, occurring on Binance.

On-chain analysts have also pointed to the market value to realised value (MVRV) ratio, a metric that assesses an asset's market value compared to its realised value. The current MVRV ratio stands at 1.47, closely resembling the ratio during the last bull run, which was 1.5.

The overall crypto market capitalisation has surged by over 7.3% in the last 24 hours, reaching $1.25 trillion, its highest valuation since April. The catalyst behind this surge is speculation surrounding the launch of a spot Bitcoin exchange-traded fund (ETF). The surge is also linked to the announcement of the iShares Spot Bitcoin Trust's listing on The Depository Trust & Clearing Corporation (DTCC).

Bitcoin's recent price increase has impacted the broader cryptocurrency market, particularly stocks related to Bitcoin.

Bitcoin-related stocks have experienced multi-week highs, with standout performers including MicroStrategy, whose stock has surged by nearly 9 percent. Coinbase, a major cryptocurrency exchange, has also seen its stock price rise by 3.42 percent.

The Bitcoin price surge has also affected Bitcoin mining stocks. Riot Blockchain recorded an 11.69 percent surge, while Marathon Digital Holdings enjoyed a remarkable 14.6 percent increase. Anticipation of the upcoming Bitcoin halving event, which will reduce the mining reward, has contributed to this surge.

Bitcoin mining stocks have outperformed BTC not only in their daily price rallies but also in terms of year-to-date gains. Companies such as Cipher Mining Inc., Riot Platforms, Northern Data AG, Hut 8 Mining Corp, Iris Energy, Bitfarms, Marathon Digital, and Hive Technologies have registered impressive growth figures, surpassing the 100 percent mark this year.

Bitcoin's price surge has led to asset outflows on exchanges, driven Bitcoin-related stocks to new highs, and bolstered Bitcoin mining stocks, reflecting the overall bullish sentiment in the crypto market.

The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash