Bitcoin’s (BTC) exchange reserves are falling continuously as analysts identify the trend for a shortage of sellers. Since the March crash, reserves on exchanges have rapidly fallen from 2,950,000 BTC to 2,700,000 BTC.
In just seven months, a 250,000 BTC drop in foreign exchange reserves means a drop of $ 2.85 billion. Behind this abrupt trend could lie two major factors: a decline in sellers and less confidence in trade.
Bitcoin reserves on exchanges. Source: Glassnode
Is the number of Bitcoin sellers decreasing in the middle of an accumulation phase?
Analysts mainly attribute the sustained decline in Bitcoin’s trading reserves to an overall shortage of sellers in the market.
While retail sellers refrain from selling BTC at current prices, institutions are also acquiring more BTC. The simultaneous drop in selling pressure and an increase in demand from buyers is an optimistic trend for Bitcoin.
A pseudonymous trader known as “Oddgems” said the data shows Bitcoin is likely moving from exchanges to non-custodial wallets. If so, it indicates that investors are transferring their funds for a longer period. he he told me:
“More and more #Bitcoin are coming out of exchanges and likely moving to non-custodial wallets. This suggests slightly lower liquidity and lower selling pressure going forward. “
Michael van de Poppe, full-time trader at the Amsterdam Stock Exchange, echoed this position.
He pointed out that BTC outflows from exchanges are increasing as institutions’ cash reserves flow into Bitcoin. he Noted:
“To be honest, more and more $ BTC is moving from trading to cold storage. Large listed companies allocating cash reserves to $ BTC. Is incredibly optimistic. “
The confluence of bitcoin’s stagnant retail exits and continued demand from institutions are supporting general sentiment around BTC.
Dan Tapiero, co-founder of 10T Holdings, also said that “Bitcoin shortages” are possible due to growing interest from institutions.
Other sourcing metrics indicate higher HODLer activity
According to Glassnode, much of Bitcoin’s supply is stored in “accumulation addresses”. These addresses represent users who have never moved BTC from their wallets, who are likely storing BTC for the long term.
When “HODLing” activity is high, which refers to maintaining BTC for extended periods of time, it usually indicates the start of a build-up phase. Glassnode he told me:
“Bitcoin’s accumulation has been trending steadily upward for months. $ 2.6M BTC (14% of supply) is currently held in accumulation addresses. Accumulation addresses are defined as addresses that have at least 2 incoming tx 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 the BitMEX probe and OKEx’s withdrawal suspension, BTC remains above $ 11,400.
The BitMEX and OKEx controversy also led to a sharp decline in foreign exchange reserves, which may have scared traders. Although BitMEX quickly withdrawals processed and OKEx portfolios show no exits, regulatory uncertainty was enough to drag foreign exchange reserves.
The BitMEX BTC power supply. Source: CoinMetrics
In early October, technical analysts identified the range of $ 11,100 to $ 11,300 as a critical short-term resistance range. BTC has been relatively stable above said range, which is technically a positive sign for further momentum.