Bitcoin Continues To Exit Exchanges As Supply Drops To New 2024 Low
August 30 2024 - 7:00PM
NEWSBTC
On-chain data shows the Bitcoin supply sitting on exchanges has
reached a new low for the year as investors continue to withdraw
their coins. Bitcoin Exchange Reserve Has Been Riding A Downtrend
Recently As explained by an analyst in a CryptoQuant Quicktake
post, the BTC Exchange Reserve has continued its drawdown recently.
The “Exchange Reserve” here refers to an indicator that keeps track
of the total amount of Bitcoin that’s currently sitting in the
wallets of all centralized exchanges. When the value of this metric
goes up, it means the investors are depositing a net number of
tokens to these platforms right now. As one of the main reasons why
investors would transfer their coins to exchanges is for
selling-related purposes, this kind of trend can lead to a bearish
outcome for the asset’s price. Related Reading: Bitcoin Open
Interest Is Shooting Up: Will Shorts Be Rekt This Time? On the
other hand, the indicator’s value heading in a downwards trajectory
suggests the holders are withdrawing their BTC from the custody of
the exchanges. Such a trend can be bullish for the cryptocurrency
as it implies investors are in accumulation mode. Now, here is a
chart that shows the trend in the Bitcoin Exchange Reserve since
the start of the year 2024: As displayed in the above graph, the
Bitcoin Exchange Reserve has been declining throughout the year,
implying that investors have constantly been shifting their coins
off into self-custody. From the graph, it’s visible that a
particularly sharp downwards move in the indicator has come as BTC
has dropped under the $60,000 level, a potential sign that these
coins taken off the exchanges were just freshly bought by their
investors, who were looking to take advantage of the price dip. The
drawdown that the Bitcoin Exchange Reserve has been witnessing
during the last few months is naturally a positive development for
the asset, as it means there is possibly lesser coins that can add
to the selling pressure in the market. But the bullish effect on
the price isn’t the only benefit for the cryptocurrency here, as
the overall downtrend in the metric implies supply is becoming less
concentrated on these platforms. Related Reading: XRP Whales Are
Depositing To Exchanges: Price To Drop Further? Exchanges are
centralized entities and when investors deposit their coins into
wallets associated with them, they lose real ownership over the
coins (at least until they withdraw), with them coming under the
management of the platform itself. This means that any mishaps with
the exchange, whether a hack or something else, also ends up
affecting its users’ holdings. As the FTX collapse showed back in
2022, large exchanges going through destabilization can also
destabilize the entire market. Thus, the less the amount of the
supply that these platforms hold, the less should their influence
be on the sector. In this view, Bitcoin investors continuing to
take their coins off into self-custody is naturally a constructive
development. BTC Price At the time of writing, Bitcoin is floating
around $59,800, down 2% over the last seven days. Featured image
from Dall-E, CryptoQuant.com, chart from TradingView.com
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