The Decline in Bitcoin Supply on Exchanges
Recent on-chain data reveals that the supply of Bitcoin on exchanges has reached its lowest point since December 2017. This shift in supply is indicative of a growing trend towards self-custody among BTC holders. The metric being monitored here is the “supply on exchanges,” which tracks the percentage of total Bitcoin supply held in centralized exchange wallets.
When this metric increases, it suggests that investors are depositing their BTC to these platforms, often for selling purposes. This can have a bearish effect on the cryptocurrency’s price. Conversely, a decrease in the indicator signifies net withdrawals from exchanges, indicating accumulation by investors and potentially bullish prospects for the asset.
Trend Analysis: Bitcoin Supply on Exchanges
A graph depicting the trend in Bitcoin supply on exchanges over the past year illustrates a consistent decline in recent months. The indicator has recently plunged further, reaching a value of 5.38%, the lowest level since December 2017. This implies that only 5.38% of circulating BTC is stored within centralized exchange wallets.
Interestingly, while the Bitcoin supply on exchanges has dropped, another metric has experienced a significant uptrend. This metric represents the sum of supply held by the ten largest Tether (USDT) addresses on exchanges. It has now reached $15.23 billion, the highest value since June 2022.
Implications for Bitcoin
Investors typically store their capital in stablecoins like USDT when seeking temporary shelter from BTC’s volatility. As these investors perceive an opportune moment to return to the volatile side of the market, they deposit their stablecoins back into exchanges. Therefore, the increased supply of USDT on exchanges indicates potential buying power for Bitcoin and other cryptocurrencies.
The recent surge in USDT supply held by the ten largest whales suggests that these entities possess significant buying potential, which can provide a boost to the market if they decide to swap their stablecoins for BTC.
Overall, these developments are positive for Bitcoin, as they indicate a decrease in selling potential and an increase in buying power.
Bitcoin Price Update
At present, Bitcoin is trading around the $38,100 level, having experienced a 4% uplift in the past week.
Hot Take: Positive Outlook for Bitcoin as Supply on Exchanges Declines
The recent decline in Bitcoin supply on exchanges, coupled with the surge in Tether supply held by major whales, suggests a positive outlook for BTC. With less selling potential and increased buying power, Bitcoin may experience upward price momentum. This trend towards self-custody reflects growing confidence among investors and highlights the desire to hold onto BTC rather than trade it on exchanges. As more investors accumulate and hold their BTC, it could contribute to long-term price appreciation. Overall, these developments indicate a favorable climate for Bitcoin and demonstrate its resilience as a digital asset.
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