Despite the recent struggling Bitcoin price, on-chain data shows that the exchange reserve just hit the lowest value since September 2018.
Bitcoin Exchange Reserve Falls to Lows Not Seen Since September 2018
As noted by an analyst in a CryptoQuant mailBTC exchange reserve has seen a further decline recently, hitting the lowest values in over 3.5 years.
The “all exchanges book” is an indicator that measures the total amount of Bitcoin present in the wallets of all exchanges.
When the value of this indicator increases, it means that the supply on exchanges increases as investors deposit their coins. Such a trend is usually bearish for the crypto price as holders usually transfer to exchanges for sale purposes.
On the other hand, the decrease in the value of the reserve would imply that investors have been withdrawing a net amount of Bitcoin recently. This trend can be bullish for the coin as it can be an indication of accumulation behavior.
Now, here is a graph showing the trend in the price of BTC over the last four years:
The value of the indicator seems to have decreased over the past couple of years | Source: CryptoQuant
As you can see from the chart above, the Bitcoin exchange reserve has been on a downward trend since the last two years.
The metric saw a temporary upward trajectory during May 2021, but after a few months of sideways movement, the stock resumed its decline. Now, the indicator has touched its lowest value since September 2018.
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The exchange reserve is often considered the “sell supply” of crypto. With its value declining for such a long period of time now, some analysts believe it may be creating a supply shock in the Bitcoin market.
Due to the dynamics of supply and demand, such a supply shock would be quite bullish for the price of cryptocurrencies in the long run.
However, others think that the decline in reserves is simply due to the the market structure is redistributedand that exchanges are not the only major source of selling pressure today.
Nonetheless, the reserve’s downward trend despite Bitcoin’s recent price struggle amid uncertainty due to the Russian-Ukrainian war may be a positive sign of conviction among holders.
At the time of writing, bitcoin price floats around $38.3k, up 1% in the last week. Over the past month, the crypto has gained 3% in value.
The chart below shows the trend in the price of BTC over the last five days.
Looks like Bitcoin has moved sideways in the last few days | Source: BTCUSD on TradingView
Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com