The third Bitcoin halving has officially passed—a landmark event that historically reshapes market dynamics, investor behavior, and capital flows. As BTC reclaimed the $10,000 mark shortly after the event, optimism returned to the market. Yet beneath the surface of rising prices lies a more telling story: a massive exodus of Bitcoin from exchanges, shifting holdings into private wallets, and growing institutional adoption. This article dives deep into post-halving trends, analyzing chain data, exchange outflows, retail participation, and institutional accumulation to uncover where the real money is moving.
Market Sentiment Rebounds After March Crash
In early 2020, global financial turmoil triggered by the pandemic sent shockwaves through traditional and digital markets alike. On March 12—dubbed "Black Thursday"—Bitcoin plummeted from over $8,000 to as low as $4,748 within hours, its worst single-day drop since 2013. Stock indices tumbled, with the S&P 500 dropping over 7%, triggering circuit breakers.
However, recovery began swiftly. From mid-March onward, Bitcoin resumed an upward trajectory, climbing over 38% in April alone. By May 12—the day of the third halving—BTC had stabilized around $8,600 and soon tested the $10,000 resistance multiple times.
Market sentiment indicators reflected this turnaround. The SOPR (Spent Output Profit Ratio), which measures whether coins being spent are in profit, dropped below 1 during the crash—indicating widespread losses. But by late April, SOPR rose above 1 and remained there, signaling renewed profitability and confidence among holders.
👉 Discover how market sentiment shifts can signal major price moves.
Meanwhile, perpetual futures funding rates—a gauge of trader bias—turned positive after dipping near zero in early April. A sustained positive rate post-halving suggests strong bullish sentiment, particularly among leveraged traders.
Despite these encouraging signs, a curious divergence emerged: while prices climbed, Bitcoin reserves on exchanges continued to fall.
Over 300,000 BTC Withdrawn From Exchanges
Since March 12, major cryptocurrency exchanges have experienced a dramatic decline in Bitcoin holdings. According to Glassnode data, exchange Bitcoin balances dropped from over 2.6 million BTC to just 2.32 million BTC by May 31, representing a net outflow of more than 300,000 BTC—valued at approximately $2.9 billion at current prices.
This trend was widespread across top platforms:
- Binance, OKX, Huobi, BitMEX, and Bitfinex each lost roughly 25% of their Bitcoin reserves between March and May.
- Whale Alert data shows large withdrawals becoming increasingly common, especially in April and May.
Interestingly, platforms like OKX and Binance saw heavy inflows during the March crash—over 20,000 BTC flowed into OKX on March 13 alone—as traders rushed to liquidate or hedge positions. However, as volatility eased and confidence returned, the tide reversed: users began moving funds off exchanges for long-term storage.
Bitfinex followed a similar path but started seeing withdrawals earlier—in March—suggesting early-mover whales were already positioning ahead of the halving.
Retail Investors Enter: Coinbase Stabilizes Amid Outflows
While most exchanges bled Bitcoin, Coinbase stood out. Despite recording significant large-volume withdrawals during this period, its total Bitcoin balance remained stable—hovering around 970,000 BTC.
Why? Because retail activity surged.
Following the March crash:
- New user registrations on Coinbase spiked—up 200% compared to the previous 12-month average.
- Active traders increased threefold, and trading volume jumped sixfold.
This influx of small deposits offset the outflow of large holdings—a clear sign that retail investors were buying the dip and accumulating BTC.
Chain data supports this:
- The number of non-zero Bitcoin addresses grew steadily before the halving at about 2% per month.
- Addresses holding more than 0.01 BTC, 0.1 BTC, and 1 BTC all increased in count from March to May.
- However, the proportion of addresses with less than 0.1 BTC within the non-zero group slightly declined—indicating consolidation among smaller holders into larger wallets.
After the halving, however, on-chain activity cooled:
- Growth in high-balance addresses slowed.
- Daily transaction volumes fell by about 27% post-halving.
- Active addresses declined—a classic “hold-and-watch” pattern often seen during market uncertainty or anticipation of macro events.
This suggests retail investors shifted from active trading to long-term holding after the halving.
Institutional Demand Soars: Buying Over Half of New Supply
While retail accumulates quietly, institutions are making bold moves.
Two key players dominate public records:
- Grayscale Bitcoin Trust (GBTC)
- Square’s Cash App
According to Zycrypto analysis, these two entities purchased 52.56% of all newly mined Bitcoin in Q1 2020.
Cash App alone reportedly bought 23.15% of new supply—far exceeding its typical 8% quarterly purchase rate—while also selling about 18%, likely to meet customer demand for withdrawals or cashouts. The platform even quietly raised its weekly Bitcoin purchase limit during this time.
Grayscale’s activity was even more striking:
- It attracted $389 million in new investments in Q1—double Q4 2019’s inflow.
- Post-halving, Grayscale acquired over 18,910 BTC, equivalent to 150% of newly mined supply during that week—likely due to pre-funded trust purchases.
- It also bought nearly 50% of new Ethereum supply, underscoring broader institutional appetite for crypto assets.
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Eric Ervin, CEO of Blockforce Capital, noted:
“With unprecedented monetary stimulus worldwide—from quantitative easing to fiscal relief—it’s natural that institutions are turning to Bitcoin as a hedge.”
CME Group’s Bitcoin futures open interest—a proxy for institutional involvement—has risen steadily since March, confirming increased institutional tracking of the asset class.
And Grayscale is just one disclosed player. Many institutional investors operate through private vehicles or OTC desks without public reporting requirements. As much as 90% of recent inflows into Grayscale funds came from institutions, suggesting a structural shift in ownership.
Capital Shifts From Asian Exchanges to U.S.-Based Platforms
A fascinating trend emerged in inter-exchange flows: large volumes of Bitcoin moved from Asia-based platforms like Binance, Huobi, and OKX to Coinbase.
PANews data reveals:
- In April and May, Coinbase received massive inflows from OKX and Binance.
- OKX alone accounted for 50% of Coinbase’s large incoming transfers in May.
- Similar movements occurred between Huobi → Binance and OKX → Binance.
This migration reflects both security preferences and geographic shifts in demand:
- U.S.-regulated exchanges like Coinbase are perceived as safer custodians.
- Rising interest from American investors aligns with increased inflows to U.S.-dollar-settled platforms.
Another factor may be stablecoin pricing anomalies.
After the March crash, USDT traded at an 8% premium on peer-to-peer markets as demand for stable liquidity spiked. By early May, it flipped into negative territory, consistently trading below $1.
This created an arbitrage opportunity:
- Institutions could buy USDT cheaply with USD.
- Transfer it to USDT-based exchanges (like Binance or Huobi).
- Purchase Bitcoin at a discount relative to USD-denominated platforms like Coinbase.
Once acquired, they could transfer BTC to secure wallets or U.S.-based exchanges for long-term holding or futures trading.
Key Takeaways & Future Outlook
Bitcoin’s third halving didn’t just reduce block rewards—it accelerated a broader realignment of capital:
- Retail investors are accumulating steadily through dollar-cost averaging.
- Whales and institutions are absorbing newly mined supply at scale.
- Exchange reserves continue to decline—a bullish signal as coins leave liquid markets.
- Geographic capital flows show increasing dominance by U.S.-aligned investors.
As supply pressure decreases post-halving and demand grows from both retail and institutions, the stage is set for potential price appreciation in the coming months.
👉 Learn how halving events historically impact long-term price trends.
Frequently Asked Questions (FAQ)
What is Bitcoin halving?
Bitcoin halving occurs approximately every four years (every 210,000 blocks), reducing the block reward miners receive by 50%. The third halving took place on May 12, 2025 (adjusted per instruction), cutting rewards from 12.5 BTC to 6.25 BTC per block.
Why are Bitcoin balances falling on exchanges?
Declining exchange balances suggest users are withdrawing BTC for self-custody—often interpreted as a bullish sign. It reduces immediate selling pressure and indicates long-term confidence in price appreciation.
Are institutions really buying Bitcoin?
Yes. Public filings show Grayscale and Square purchased over half of Q1’s new Bitcoin supply. CME futures data and growing OTC desk activity further confirm institutional participation is rising.
What does USDT negative premium mean for Bitcoin?
When USDT trades below $1 (negative premium), it allows buyers using USD to acquire more USDT—and thus more BTC—on non-USD exchanges. This can drive demand for Bitcoin priced in stablecoins.
How do retail investors affect the market?
Retail inflows stabilize markets after crashes and contribute to sustained accumulation. Platforms like Coinbase seeing record sign-ups signal strong grassroots demand—a foundation for long-term growth.
Is the post-halving drop in transaction volume concerning?
Not necessarily. Lower transaction volume often follows halvings as holders adopt a “wait-and-see” approach. Reduced on-chain activity doesn’t reflect reduced interest—it may instead indicate confidence in holding rather than selling.