Glassnode data insight丨The exchange’s Bitcoin balance continues to decline, which is very different from three years ago

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Many people believe that this trend means that more investors are committed to long-term holdings, rather than cashing out as retail investors.

Written by: Liesl Eichholz
Translation: Olivia

With the price surpassing $18,000 for the first time since 2017, BTC appears to be preparing to break its previous all-time high. At the same time, the plummeting foreign exchange balances verified that investors intend to hoard BTC.

Bitcoin market health

BTC has another impressive performance this week, rising to above $18,000 for the first time since December 2017, and it is close to a historical high. This week, the market opened at $15,930, quickly rose to over $17,000, then rose to $18,000, and finally ended the 47th week at a price of over $18,600.

Throughout the 47th week, the fundamentals on the Bitcoin chain experienced a strong rise. GNI rose by 6 points to 67 points, and all three sub-indices increased.

Glassnode data insight丨The exchange's Bitcoin balance continues to decline, which is very different from three years ago

Internet health increased by 11 points throughout the week, and the final score was 67 points. The network activity sub-category performed particularly well, with an increase of 13 points due to the increase in the number of active entities and the transaction rate on the chain.

Liquidity rose by 2 points and the final score reached 56 points this week. Although Bitcoin’s continuous withdrawal from exchanges has led to a decline in transaction liquidity, transaction liquidity has increased with the increase in the number of transactions on the chain.

Emotionally , the final score this week was 68 points, an increase of 6 points. The savings behavior subcategory contributed the most to this growth, with an increase of 24 points (140%), which was due to the slowing down of BTC speculators’ selling speed.

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Glassnode data insight丨The exchange's Bitcoin balance continues to decline, which is very different from three years ago

Glassnode guide

In the past week, the guide has rushed into the bull market quadrant, and there have been considerable gains in GNI and price movements.

Glassnode data insight丨The exchange's Bitcoin balance continues to decline, which is very different from three years ago

Its solid position in the bull market system1 is supported by strong on-chain fundamentals, continued growth in adoption rates, and impressive price increases in the past few weeks.

In addition, BTC continued to significantly outperform the stock market. Compared with the 2% drop in the SPY index last week, it has grown by nearly 17% in the past week. This supports the narrative surrounding potential decoupling, if this status quo can be maintained-removing the stock price as an upper limit for Bitcoin’s growth.

Altcoin overview

Relative to BTC performance

Except for BNB, mainstream altcoins performed well against BTC throughout the 47th week. XRP saw the biggest increase, with an increase of nearly 50%, second only to Bitcoin.

Glassnode data insight丨The exchange's Bitcoin balance continues to decline, which is very different from three years ago

Compared with other altcoins, BNB’s performance is still poor. When other currencies in the market are thriving, BNB’s market value has fallen to the tenth place.

Relative to USD performance

In dollar terms, all major altcoins have shown gains in the past week-even BNB, despite its losses relative to Bitcoin. XRP rose as much as 73.9% this week.

Glassnode data insight丨The exchange's Bitcoin balance continues to decline, which is very different from three years ago

In the past few months, LTC has also returned to the top ten position, hovering from the 12th place eight weeks ago to the current 6th place.

BTC exchange balance continues to decline

Since the beginning of 2020, the number of BTC on exchanges has almost continued to decline, with a decline of nearly 20% throughout the year. Since October, as the price of BTC has risen sharply, the withdrawal of Bitcoin from the exchange has been faster.

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Glassnode data insight丨The exchange's Bitcoin balance continues to decline, which is very different from three years ago

This is completely different from the rapid rise in exchange balances during the 2017 bull market . Generally speaking, withdrawal from an exchange indicates that the investor intends to hold BTC, rather than planning to sell it in the near future. On the contrary, less determined retail investors tend to keep their BTC on the exchange, ready to cash out at any time.

Therefore, many people believe that this trend means that more investors are committed to long-term holdings, rather than cashing out as retail investors . Therefore, the withdrawal of BTC from the exchange is a bullish signal for Bitcoin, which shows that investors believe that despite close to historical highs, the asset still has more room for growth.

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