Sudden Crypto Exchange Outflows Signal Looming Supply Shock – Here’s How to Prepare with Kraken

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The crypto market could be gearing up for a period of high volatility. The Crypto Fear & Greed Index stands at 66, while the crypto market has shown a modest increase of 0.96%. However with record-high crypto outflows from major exchanges, many analysts are predicting a supply shock that could result in high volatility and a potential bullish price movement. 

In turbulent times, staying informed is vital for both seasoned investors and relative newcomers. Preparation is key to navigating any abrupt market changes and protecting your investments. 

Record High Outflows: What This Means for BTC, ETH, and the Wider Crypto Market

Recent crypto exchange inflow/outflow charts from Crypto Quant show that Bitcoin (BTC) and Ethereum (ETH) are being withdrawn from exchanges at unprecedented rates. For instance, Coinbase experienced a staggering $500 million in Bitcoin outflows within just 48 hours earlier this week. 

Ethereum Exchange Outflow (Total) - All Exchanges

The total amount of ETH and BTC held in reserves on crypto exchanges has dropped to new lows. This high outflow rate can be attributed to many factors but one of the most common reasons is holders moving their crypto assets off exchanges for long-term storage. This reduced supply across exchanges can lead to an overall scarcity and low liquidity for trading, driving crypto prices higher due to supply shock. 

Ethereum Exchange Reserve - All Exchanges

Highly Anticipated Ethereum ETFs & Their Potential Impact

Some of this bullish sentiment may be attributed to anticipation surrounding spot Ethereum ETFs. The SEC has recently given the green light to institutions looking to offer spot ETH ETFs with most analysts and crypto enthusiasts seeing this as the Ethereum ETF approval that many have been waiting for. Major financial institutions like Blackrock, Fidelity, and VanEck have already submitted their S-1 forms for approval. 

Once trading begins, these ETFs are expected to attract significant investment, potentially causing ETH to outperform BTC for the first time in years. This could further exacerbate the supply shock, driving up prices as demand increases. 

Bitcoin ETFs have attracted more “straight-edge” investors into the crypto markets, as they can gain exposure to Bitcoin through a regulated fund. We may see something similar with Ethereum ETFs, which could result in positive gains across the market. 

What is a Supply Shock & How Could it Affect Prices?

A supply shock in crypto occurs when the availability of one or more cryptocurrencies decreases while demand either increases or remains constant. This shortage usually leads to increased price volatility and can result in an upward price movement as demand outpaces supply due to an imbalance in crypto inflows and outflows. 

For Bitcoin and Ethereum, a supply shock could mean high volatility in the short term but sustained price increases, making these assets more valuable over the long term

Derivatives Market Open Interest: A Bullish Indicator for Bitcoin?

One important indicator is the derivatives market open interest (OI). This is the total number of open or outstanding contracts held by traders at the end of a period. In the past 24 hours, the OI for Bitcoin has increased, showing an increase in speculation surrounding the asset. In general, a high OI often results in market volatility.

Kraken: Your Go-To Exchange in These Volatile Times

With many indicators pointing to increasing volatility in the crypto markets, choosing a reliable exchange is crucial. Kraken stands out as a leading crypto exchange offering deep liquidity and robust security measures — essential to navigating market turbulence. 

kraken homepageOperating in the crypto landscape for over 13 years, Kraken crypto exchange was founded by Jesse Powell and is known for its commitment to regulatory compliance and safeguarding customers’ assets. 

With supply decreasing across the board, many traders may be concerned about the safety of assets held on exchanges. Kraken was the first crypto exchange to pass a cryptographically verifiable Proof of Reserves audit and is regulated in several countries, including the US. 

Why Choose Kraken?

Alongside Proof of Reserves, Kraken also employs cold storage and hot wallet solutions. All crypto infrastructure is kept in secure cages under 24/7 surveillance by armed guards and cutting-edge technology. 

Other security features include 2FA, account timeout, state-of-the-art data encryption, real-time monitoring for suspicious activity, and email confirmation for withdrawals. 

Kraken also offers deep liquidity, with a 24-hour trading volume of $700 million. This is essential in securing the best prices on trades and ensuring a smooth trading experience. For any issues, the Kraken exchange has high-priority 24/7 live chat and email support. 

How to Get Started on Kraken: A Step-by-Step Guide

Getting started on Kraken is a straightforward process.

kraken create an account

  1. Create an Account: Visit Kraken’s website and sign up for an account. You’ll need to provide some basic information and verify your identity.
  2. Deposit Funds: Once your account is set up, deposit funds using one of the supported payment methods.
  3. Start Trading: Navigate to the trading section, choose the cryptocurrencies you wish to trade and place your orders.

Kraken is available as a mobile app, allowing for a smooth trading experience wherever you are. For added security, traders can enable 2FA on their account.

Stay Ahead of the Market with Kraken

As the crypto markets brace for a potential supply shock and the imminent introduction of spot Ethereum ETFs, staying ahead of market trends is crucial. Kraken offers the tools and support to navigate these changes confidently.

Join Kraken today to stay informed, stay secure, and make the most of your crypto investments. 


Medb Kiely-Cuddy

Medb is an editor with three years of experience in blockchain and cryptocurrency and a BSc in Mathematical Science. Having worked with dynamic startups in the crypto space, she is passionate about translating complex concepts into accessible content that educates and empowers. In her professional journey, Medb has gained invaluable insights into the transformative potential of DeFi, NFTs, and other groundbreaking applications of blockchain technology. She’s always on the lookout for the latest trends and advancements in the industry, underscoring her dedication to providing readers with insightful analysis and thought-provoking commentary. Outside of her work, Medb can be found hiking…