According to IntoTheBlock data, since the launch of the spot Bitcoin ETF in January, the weekly net outflow of Bitcoin from exchanges has been consistently increasing. This week, the net outflow reached $540 million, marking the highest amount since June 2023.
This reflects a belief in Bitcoin's potential as a store of value and a hedge against inflation. Long-term holders and institutional investors, in particular, may be taking a more strategic approach to their Bitcoin holdings, viewing them as a strategic asset allocation rather than a short-term speculative investment.
All we can do is just speculate about reason for the movement of these funds out of exchanges. It could be that the exchanges are changing wallets or people are withdrawing them and putting them in in custodial wallets. It could also be that people now prefer to invest in the ETF more than keeping funds in centralized exchanges.
Any point of view I don't see any relationship between Bitcoin and inflation. Bitcoin has a store value, and everyone stores or trades it to gain significant profits. It's true that many institutional investors are entering the Bitcoin market, and the market is pumping too. But I don't think this could reduce inflation anyway. Governments control the economy, and they are responsible for inflation.
Bitcoin might not reduce a country's inflation but it can help shield people's money from losing value during inflation. Bitcoin can be used as a hedge against inflation mostly in countries that are going through currency devaluation or loss of value. Instead of keeping funds in local currencies which is losing value, some people prefer to keep their money in Bitcoin to protect their funds from losing value. Such a person will end up making a profit from the increase in the price of Bitcoin and save their money from losing value. An example is Nigeria where even with the restrictions placed on Bitcoin, Nigerians were still embracing it because it was the best to curb individual or household inflation.