Bitcoin and Ethereum Outflows at Kraken Reach Highest Levels Since 2017

Recent data indicates that Kraken, a cryptocurrency exchange, has experienced its largest outflows of Bitcoin (BTC) and Ethereum (ETH) since 2017. 

Meanwhile, this shift in digital asset holdings raises questions about the exchange’s current state and the broader cryptocurrency market dynamics.

According to insights from Joao Wedson, founder and CEO of Dominando Cripto, Kraken’s Bitcoin reserves have plummeted to levels not seen since 2018, now holding approximately 122,300 BTC. Similarly, Ethereum reserves have fallen below one million units, a figure last observed in early 2016. Wedson shared these findings on CryptoQuant, a blockchain analytics platform.

Wedson noted, 

“Kraken’s #Bitcoin reserves have dropped to the same level as in 2018, now holding 122,300 BTC. For #Ethereum, this is the first time Kraken’s reserves have fallen below 1 million units, a level not seen since early 2016.”

The scale of these withdrawals is substantial. The exchange saw an outflow of 49,100 BTC, valued at roughly $3.33 billion, and 572,100 ETH, valued at around $2.15 billion. These significant movements suggest a strategic repositioning of reserves by Kraken or possible institutional activity.

Impact of Spot ETF Approvals

The recent approval of spot Bitcoin and Ethereum ETFs by the Securities and Exchange Commission (SEC) has influenced these outflows. The heightened interest in these ETFs has led to a supply crunch on exchanges, including Kraken. Since the approval, approximately 777,000 ETH, valued at about $3 billion, have been withdrawn from various exchanges.

The anticipation of spot Ethereum ETFs trading has contributed to the outflows, even though trading has not yet commenced. Investors are likely moving their assets off exchanges in preparation for ETF-related strategies, impacting the overall liquidity.

Market Reactions and Price Trends

The current market conditions reflect these substantial withdrawals. Bitcoin was trading at $68,974 at press time, showing a 0.15% increase in the last 24 hours. Conversely, Ethereum was trading at $3,771, experiencing a slight decrease of 1.07%, according to CoinMarketCap.

BTC Vs. ETH/USD 1-day price chart (Source: CoinMarketCap)

Market analysts are monitoring these developments closely. The outflows and potential supply shock could drive a price surge in the coming months. This scenario is bolstered by improving the open interest of the derivatives market, which supports a bullish outlook for Bitcoin.

Thomas Fahrer, co-founder of Apollo, predicted that Bitcoin’s price could reach $3.5 million per coin by 2030. While this projection is speculative, it underscores the potential for significant growth in the cryptocurrency market.

Institutional and Self-Custody Trends

The shift away from exchanges as primary holders of crypto assets is becoming more apparent. Address screenings suggest that the movements of assets from Kraken were “synchronized and rapid,” implying decisions rather than random withdrawals. This aligns with a broader trend where major players opt for greater self-custody amidst rising institutional involvement.

Market analyst Ali highlighted, “Since the @SECGov approved spot #Ethereum ETFs, approximately 777,000 $ETH — valued at about $3 billion — have been withdrawn from #crypto exchanges!”

This trend indicates investors’ preference for long-term holding behaviors, which reduce sell pressure and potentially stabilize the market. The move towards self-custody reflects a cautious approach by investors, who aim to safeguard their assets amidst fluctuating market conditions.