On-chain data shows a tendency in the present Bitcoin (BTC) cycle that’s different from the pattern followed for the past epochs.
More Bitcoin (BTC) Has Left Exchanges During The Current Cycle So Far
Reports by data from the on-chain analytics company Glassnode, the previous cycles saw the balance on exchanges register a net increase. The “balance on exchanges” here refers to the total amount of Bitcoin (BTC) that’s as of now sitting in the wallets of all centralized exchanges.
And once the value of this metric goes up, it means the investors are depositing a net number of coins to these platforms as of now. On the other hand, a decline suggests that withdrawals are occurring in the market right now.
Here is a chart that shows how the value of this Bitcoin (BTC) indicator has changed during the last two cycles and in the present epoch so far:
Looks like the present cycle is showing a different tendency than what was seen before | Source: Glassnode on Twitter
Glassnode has taken the “halvings” as the starting point of each of the cycles or epochs here. Halvings are periodic events where the block bonus of the miners (which they receive for solving blocks on the network) are permanently cut in half. These take place approximately every four years.
These events have wide-reaching consequences for the economics of the digital currency, as the production price of the investment is constrained following them. This narrative behind the halvings is likewise so strong that the height of the bull runs has always took place after them.
From the over graph, it’s visible that during epoch 2, that is, the Second cycle that the investment observed, the Bitcoin (BTC) balance on exchanges saw a net growth of 1.02 Million BTC. The following cycle, epoch 3, saw the metric growing by 1.97 Million BTC, which is almost double what the previous cycle registered.
Note that epoch 1 is absent here because it was the 1st time ever that the investment was trading, and hence, Bitcoin exchanges were likewise only a new existence. This implies that their supply could have only gone up here, as it previously didn’t exist at all.
In contrast to these cycles, on the other hand, where the exchanges received a large number of net inflows, the present epoch has seen investors taking out around 680,000 Bitcoin from these platforms.
The below chart outlines how this decline in the Bitcoin (BTC) balance on exchanges has taken place.
The value of the metric appears to have been going down over recent months | Source: Glassnode on Twitter
As displayed in the over graph, the Bitcoin (BTC) balance on exchanges hit a peak value of 3.2 Million Bitcoin just before the COVID collapse took place back in March 2020.
“Retrospectively, the Covid Crisis appeared to be a catalyst for an inflection in participant interaction with exchanges, marking the inauguration of a macro decline in Exchange Balances,” notes Glassnode.
Today, the indicator’s value stands at 2.3 Million BTC, which suggests a decline of 28 percent from the peak. This cycle is out of the ordinary in terms of this metric, but it’s worth noting that the epoch is is still to end.
Nonetheless, it’s nonetheless unlikely that a reversal could take place now to keep the present cycle in line with the pattern from the previous cycles, as the following halving isn’t that far anymore (2024).
At the time of publication, Bitcoin (BTC) is trading around $26,700, up 1 percent in the last week.
Bitcoin has plunged in the past day | Source: BTCUSD on TradingView
Featured image from iStock.com, charts from TradingView.com, Glassnode.com