In the third quarter of 2023, addresses holding at least 0.1% of the Bitcoin (BTC) supply experienced notable net inflows, as revealed in a Q3 2023 on-chain report by crypto market intelligence firm IntoTheBlock.
Despite Bitcoin's price dropping to $25,000, these addresses witnessed single-day inflows amounting to $600 million, indicating a subtle but strong bullish sentiment among holders.
Interestingly, following this single-day inflow of $600 million into Bitcoin, similar wallets observed three additional spikes of net inflows, each exceeding $400 million. This suggests a growing and sustained interest in the cryptocurrency.
Crucially, these substantial net inflows coincided with a period when centralized exchanges were witnessing outflows. IntoTheBlock suggests that these wallets likely belong to organic buyers rather than being solely associated with centralized exchanges.
However, the report highlights a potential test of patience for Bitcoin holders if the U.S. Securities and Exchange Commission (SEC) delays its decision on a spot Bitcoin exchange-traded fund (ETF) application. Despite the substantial net inflows from addresses holding at least 0.1% of BTC's supply, the cryptocurrency saw minimal net outflows of $90 million from centralized exchanges during the quarter. This marks a decrease from the $1.3 billion outflows seen in the second quarter of 2023 but an increase from the $140 million outflows recorded in the third quarter of 2022.
Notably, Bitcoin transaction fees decreased by over 71% in Q3 2023 compared to Q2. This decline followed the introduction of the BRC-20 token and the Ordinals protocol, which facilitated the trading of Meme tokens on the Bitcoin network. However, Bitcoin's network fees have more than doubled since Q3 2022, underscoring the sustained demand driven by the Ordinals ecosystem. Simultaneously, on-chain metrics indicate that the number of long-term BTC holdings is increasing at a rate reminiscent of the 2017 cycle, a factor that has historically driven significant appreciation in Bitcoin's price, notably seen in 2020.
