The data on the blockchain shows that Bitcoin’s supply is now at its lowest level for this year. Investors continue to remove their coins.
Bitcoin Exchange Reserve is on the decline.
CryptoQuant Quicktake by analyst explains the following: postThe BTC Exchange Reserve continues to be depleted. 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.
If the value of the metric increases, this means that investors are currently depositing tokens into these platforms. 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.
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. This trend is bullish as it indicates that investors are in accumulation mode.
This chart shows the Bitcoin Exchange Reserve’s trend from the beginning of 2024.
According to the graph shown above, Bitcoin Exchange Reserves have been decreasing throughout the past year. It is likely that investors were constantly moving their coins from the exchange into private 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.
This is good news for Bitcoin, since it is less likely that coins will be added to the marketplace that could increase the pressure.
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.
When investors deposit coins in wallets that are associated with exchanges, the real ownership of those coins is lost (at least up until withdrawal), and they fall under management by the platform.
This means that any mishaps with the exchange, whether a hack or something else, also ends up affecting its users’ holdings. The exchange is a very popular platform. FTX collapse As we saw in 2022 large exchanges that are destabilized can destabilize an entire market.
The less supply these platforms have, the smaller their impact on the industry should be. This view is that Bitcoin investors continue to keep their coins in self-custody.
BTC price
Bitcoin’s price is currently around $59,000, down by 2% in the past seven days.
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Source: www.newsbtc.com