Bitcoin reserves (BTC) on exchanges are continuously falling, while analysts point out the trend towards a shortage of sellers. Since the March crash, exchange reserves fell rapidly from 2,950,000 BTC to 2,700,000 BTC.
In just seven months, a 250,000 BTC drop in exchange reserves means a decrease of $ 2.85 billion. Behind the steep trend could be two main factors: a decline in sellers and less trust in exchanges.
Bitcoin reserves on exchanges. Source: Glassnode
Is The Number Of Bitcoin Sellers Falling In The Middle Of A Build-up Phase?
Analysts primarily attribute the sustained decline in Bitcoin holdings on exchanges to a general shortage of sellers in the market.
As retailers refrain from sell BTC at the current Bitcoin price, institutions are also acquiring more BTC. The simultaneous drop in selling pressure and increased demand from buyers is an upbeat trend for Bitcoin.
A trader whose pseudonym is known as “Oddgems” said the data shows that Bitcoin is likely moving from exchanges to non-custodial wallets. If so, it indicates that investors are moving their funds to hold them for a longer period. He said what:
“More and more #Bitcoin going off exchanges and most likely being transferred to non-custodial wallets. This suggests slightly less liquidity and less selling pressure going forward.”
Michael van de Poppe, a full-time trader on the Amsterdam Stock Exchange, echoed the position.
He stressed that BTC outflows from exchanges are growing as institutions’ cash reserves flow into Bitcoin. He pointed what:
“To be honest, more and more BTC is going from exchanges to offline wallets. Large publicly traded companies allocate their cash reserves to BTC. It is incredibly bullish.”
The confluence of Stagnant Bitcoin Retail Flows and Consistent Demand from Institutions Encourage General Sentiment Around Bitcoin.
Dan Tapiero, the co-founder of 10T Holdings, said similarly what “Bitcoin scarcity” is possible due to growing institutional interest “.
Other supply metrics indicate increased HODLer activity
According to Glassnode, a large part of the Bitcoin supply is stored in “accumulation addresses”. These addresses represent users who never moved Bitcoin from their wallets, who are probably storing BTC for the long term.
When “HODLing” activity is high, which means that you have Bitcoin for long periods, usually indicates the beginning of an accumulation phase. Glassnode He said:
“The accumulation of Bitcoin has been on a steady upward trend for months. $ 2.6 million of BTC (14% of supply) is currently held in accumulation directions. Accumulation addresses are defined as addresses that have at least 2 incoming transactions and have never spent BTC“.
Positive On-Chain Fundamental Metrics Complement Bitcoin’s Favorable Technical Structure. Despite various events that could have put selling pressure on BTC, including charges against the BitMEX and the suspension of OKEx withdrawals, Bitcoin is still above $ 11,400.
The controversy over BitMEX and OKEx also caused exchange reserves to decline sharply, which possibly spooked traders. Although BitMEX quickly processed withdrawals and OKEx wallets show no outflows, regulatory uncertainty was enough to send exchange reserves shifting.
BitMEX Bitcoin Supply. Source: CoinMetrics
In early October, about Technical analysts pointed to the $ 11,100 to $ 11,300 range as a critical short-term resistance range. The price of Bitcoin has been relatively stable above said range, which is technically a positive signal for renewed momentum.
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