Bitcoin Exchange Outflows and Institutional Demand Strengthen Hodling Narrative

Net outflows of $450 million from exchanges are a sign of something we have talked about a lot in the past: Investors are moving their assets into long-term storage instead of keeping them on exchanges for trading.

Bitcoin’s enduring appeal was reinforced in recent days by a fresh series of key developments that for the most part don’t recur unless the outlook for an asset is favorable over the long term.

A significant amount of BTC is not only being taken off exchanges but also being held in ways that suggest those holding the asset are making a long-term commitment. In a mere day, Bitcoin saw almost $450 million leave centralized exchanges and head elsewhere—most likely into cold storage.

Meanwhile, El Salvador, which under President Nayib Bukele has become a lightning-rod experiment in Bitcoin adoption, added five more of the leading crypto assets to its strategic reserves. MicroStrategy, under the leadership of its erstwhile Bitcoin evangelist CEO Michael Saylor, is now up to raising over $560 million through its offering of preferred stock.

Furthermore, Bitcoin exchange-traded funds (ETFs) keep gaining ground, posting $319 million in net inflows just on January 31. BlackRock’s IBIT ETF led the pack with $364 million in net inflows, pushing Bitcoin ETFs into a four-day stretch of notching net inflows.

Bitcoin’s development as a legitimate financial asset is being propelled by a wave of activity from institutions. The latest capital raise by MicroStrategy reinforces this trend and in a way epitomizes it.

El Salvador Continues Its Bitcoin Accumulation Strategy

Though institutions are key to Bitcoin’s adoption, countries are also making substantial moves to accumulate BTC. El Salvador, which in 2021 became the first country to adopt Bitcoin as legal tender, has continued to expand its Bitcoin hoard. In the past 24 hours, the country added five more BTC to its reserves, demonstrating that it remains committed to Bitcoin.

Under President Bukele’s leadership, El Salvador has adopted an extraordinary approach to achieving financial sovereignty, frequently adding to its Bitcoin holdings and launching BTC-centered programs. While five Bitcoin may not seem like a lot, it is in line with Bukele’s style of not-so-quiet accumulation.

Bitcoin ETFs See Massive Inflows, Led by BlackRock’s IBIT

In recent weeks, one of the most significant developments for Bitcoin has been the increasing inflows into spot Bitcoin ETFs. Bitcoin spot ETFs had a total net inflow of $319 million on January 31, 2023, which was the fourth consecutive day of positive flows.

It is particularly noteworthy that BlackRock’s IBIT ETF alone netted an impressive $364 million in inflows, underscoring a robust institutional appetite for Bitcoin via regulated vehicles.