Bitcoin Exchange Supply Drops to Year-to-Date Lows
Recent on-chain data reveals that the supply of Bitcoin on exchanges has decreased, returning to its year-to-date lows. The key metric to consider is the “percent balance on exchanges,” which tracks the total percentage of Bitcoin held in centralized exchange wallets.
An increase in this indicator suggests that investors are depositing more cryptocurrency into these platforms, often for selling purposes. This trend can have bearish implications for Bitcoin. Conversely, a decrease in the metric signifies that holders are moving their coins from centralized entities to self-custodial addresses. This behavior typically indicates a long-term bullish outlook for the price.
Take a look at the chart below, which illustrates the trend in Bitcoin percent balance on exchanges since the beginning of 2023:
BTC Price Stalls
The recent Bitcoin rally has slowed down, with the cryptocurrency struggling to make significant gains. Currently, the coin is trading at $27,100.
Hot Take: Decreasing Exchange Supply Indicates Bullish Long-Term Outlook
The decline in Bitcoin’s exchange supply suggests that more investors are moving their coins out of centralized exchanges and into self-custodial wallets. This behavior indicates a desire to hold onto Bitcoin for extended periods, which could have positive implications for its price in the long run. As demonstrated by last year’s examples from 3AC and FTX, a reduced number of coins held by centralized entities tends to contribute to market stability. While the recent rally may have paused, the overall trend in exchange supply provides a promising outlook for Bitcoin’s future.
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