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Crypto Holders HODL On: Exchange Inflow to Outflow Ratio Hits Two-Year Low

According to data from CryptoQuant, a leading provider of on-chain analytics for cryptocurrencies, the ratio of inflow to outflow transactions of the exchanges has been steadily declining for the past two years, reaching its lowest point since April 2022.

The inflow to outflow ratio measures the number of transactions that deposit crypto assets into the exchanges versus the number of transactions that withdraw them. A lower ratio indicates that more users are moving their crypto assets out of the exchanges, either to store them in cold wallets, stake them in DeFi protocols, or spend them on goods and services.

The graph below shows the inflow to outflow ratio for the top 17 exchanges by trading volume, as tracked by CryptoQuant. As can be seen, the ratio has been decreasing since April 2022, when the price of Bitcoin reached its all-time high of over $69,000. Despite the price fluctuations and corrections in the following months, the ratio continued to drop, indicating that crypto holders are not willing to sell their assets even at high prices.

Source: CryptoQuant

One possible explanation for this trend is that crypto holders are expecting the price to continue to rise in the long term, as more institutional investors, corporations, and governments adopt and embrace cryptocurrencies. Another possible explanation is that crypto holders are diversifying their portfolios and exploring the opportunities offered by the growing DeFi sector, which allows them to earn interest, borrow, lend, and trade their assets without intermediaries.

Whatever the reason, the data suggests that crypto holders are becoming more confident and savvy in managing their assets, and are not easily swayed by market volatility or FUD (fear, uncertainty, and doubt). This could signal a maturing and strengthening of the crypto ecosystem, as well as a shift in the power dynamics between the exchanges and the users.

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