Exchange Reserves Hit New 4-Year Lows


On-chain data shows that Bitcoin trading reserves have now reached a 4-year low, a potentially bullish sign for the cryptocurrency’s price.

Bitcoin exchange reserves have decreased recently

As pointed out by an analyst at CryptoQuant MailBTC exchange reserves are down, indicating continued buying in the market.

The “All stock exchanges“It is an indicator that measures the total amount of bitcoin currently stored in the wallets of all central exchanges.

When the value of this metric goes up, it means that investors are depositing a net amount of coins to exchange at the moment.

Such a trend, when prolonged, can be bearish for the price of the cryptocurrency as holders usually transfer their crypto to exchanges for selling purposes.

Related reading | When greedy? Bitcoin Market Crushed Under a Month of Fear

On the other hand, the downtrend in the reserve indicates that investors are withdrawing their bitcoin from exchanges at the moment. This type of trend can be bullish for the price of the cryptocurrency.

Now, here is a chart showing the trend in bitcoin exchange reserves over the past few years:

Bitcoin exchange reserve

The value of the metric seems to have experienced downwards movement over the last year | Source: CryptoQuant

As you can see in the chart above, Bitcoin exchange reserves have noticed some sharp downward movement lately, which has brought its value to a 4-year low.

This is a continuation of the general downtrend in the index that has been going on for almost the full 12 months now.

Related reading | US Macroscopic Pressure Responsible for Complete Bitcoin Downtrend

This could mean that the market has been in a constant build-up, which means that the supply shock could deepen into the Bitcoin market.

Due to the dynamics of supply and demand, this shock could be constructive for the price of the cryptocurrency in the long term.

However, some data from December 2021 suggest The growth of new investment vehicles such as ETFs is likely to be one of the reasons behind the decline in exchange reserves.

Currencies simply move from one source of selling pressure to another. Such a shift could mean that the supply shock will not occur once exchange reserves are reduced.

However, some of the decline must be caused by buying in the market, so the diminishing reserve can still be bullish for the value of bitcoin.

BTC price

At the time of writing this report, Bitcoin price It is floating around $30.1K, up 1% in the last week. Over the past month, the cryptocurrency has lost 12% of its value.

Bitcoin price chart

Looks like the value of the crypto has moved sideways over the past couple of days | Source: BTCUSD on TradingView
Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com



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