The case for a continued rally in bitcoin (BTC) to $40,000 and higher by the year-end has strengthened, with centralized exchanges recently witnessing a sizeable exodus of coins.

Data by Glassnode shows just over 37,000 BTC, worth $1.4 billion, has been withdrawn from exchanges since Nov. 17 in a sign of investors taking direct custody of their coins.

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The outflow likely represents a bias for a long-term holding strategy, although some of it could have stemmed from Binance's guilty plea. The bias for holding means strong demand and weakening sell-side pressure in the market amid euphoria from an expected launch of a spot exchange-traded fund (ETF) in the U.S.

Exchange outflows have historically marked local price lows, supporting expectations of a medium-term price rise.

Bitcoin withdrawals from centralized exchanges are usually inversely correlated to prices. (Glassnode)

Bitcoin withdrawals from centralized exchanges are usually inversely correlated to prices. (Glassnode)

BTC traded above the $38,800 mark early Friday, leading to gains in the broader crypto market, with some major tokens jumping as much as 5% in the past 24 hours.

Overall market capitalization rose to $1.5 trillion – a level last seen in May 2022 – adding some $400 billion since the start of October.