Bitcoin reserves on exchanges have been declining, and analysts have pointed out that this may be a lack of sellers. Since the plunge in March, the exchange’s bitcoin reserves have quickly dropped from 2,950,000 BTC to 2,700,000 BTC.
In just seven months, the exchange’s bitcoin reserves have decreased by 250,000 BTC, which means that the reserves have fallen by $2.85 billion. There may be two main factors that have led to a decrease in reserves: fewer sellers and lower trust in exchanges.
Bitcoin reserves on the exchange Source: Glassnode
Has the number of Bitcoin sellers in the hoarding phase dropped?
In general, analysts mainly attribute the continued decline in bitcoin reserves on exchanges to a shortage of sellers in the market.
As retail investors refuse to sell BTC at the current price, institutions are buying more BTC. The decline in selling pressure and the increase in buyer demand have combined to lead to an optimistic trend for Bitcoin.
Anonymous trader “Oddgems” stated that the data shows that Bitcoin is likely to be transferred from exchanges to non-custodial wallets. If so, it indicates that investors are transferring their funds to hold them for a longer period of time. He said:
“More and more bitcoins are flowing out of exchanges and are likely to be transferred to non-custodial wallets. This indicates that liquidity will be slightly weakened in the future and selling pressure will also decrease.
Michael van de Poppe, a full-time trader at the Amsterdam Stock Exchange, agrees.
He emphasized that when the cash reserves of institutions flow into Bitcoin, the outflow of BTC from exchanges is increasing. He pointed out:
“To be honest, more and more BTC is shifting from exchanges to cold wallet storage. Large listed companies allocate cash reserves to BTC. I am very bullish on Bitcoin.”
The stagnant outflow of retail investors and the continued demand from institutions have boosted people’s overall sentiment towards Bitcoin.
Dan Tapiero, the co-founder of 10T Holdings, also said that due to the surge in institutional interest, there may be a “shortage of Bitcoin”.
Other supply indicators show more active hoarding
According to data from Glassnode, a large part of the Bitcoin supply is stored in “accumulation addresses.” These addresses represent users who have never withdrawn BTC from their wallets, and these users are likely to store BTC for a long time.
When the “hoarding” activity is active, it means that investors will hold BTC for a long time, which usually means the beginning of an accumulation phase. Glassnode said:
“For several months, Bitcoin accumulation has been on a continuous upward trend. There are currently 2.6 million BTC in the accumulation address (14% of the supply).”
Active basic indicators on the chain complement the good technical structure of Bitcoin. Although various events, including the BitMEX investigation and OKEx’s suspension of withdrawals, may have caused selling pressure on Bitcoin, Bitcoin is still above $11,400.
The dispute between BitMEX and OKEx has also led to a sharp decline in exchange reserves, which may panic traders. Although BitMEX quickly processed the withdrawals and the OKEx wallet did not flow out, the regulatory uncertainty was enough to cause the exchange’s reserves to decrease.
BitMEX BTC supply source: CoinMetrics
In early October, technical analysts pointed out that the range of US$11,100 to US$11,300 was a key short-term resistance level. Bitcoin is relatively stable in the above range. Technically speaking, this is a positive signal to resume its rally.
