On-chain data suggests Bitcoin price will not see a Black Thursday repeat as the amount of BTC held at exchanges has dropped to a 2020 low. As Bitcoin (BTC) price pulled back below $12,000, some investors began to worry that another crypto market crash like one that occurred on March 11 would occur.
However, data from CryptoQuant, an on-chain analysis firm, suggests otherwise, as Bitcoin exchange reserves hit a 2020 low. CryptoQuant CEO Ki Young Ju said:
“People keep worrying about the great sell-off like March, but exchanges don't have as many idle Bitcoins (waiting to be sold) as that day.”
The Bitcoin exchange reserve metric shows how much BTC is being held at exchanges. When the figure reaches a low it suggests that investors have withdrawn their holdings from the exchange into a more secure and permanent storage.
Data from Chainalysis, also shows that the amount of BTC held for to 52 weeks is on the rise. Furthermore, Glassnode, an on-chain analytics provider, recently observed similar behavior and said that “the decline of Bitcoin exchange balances signals reduced selling pressure.”
At the time of writing, 2.6 million BTC are being held at exchanges, which is lower than the amount held before the March sell-off when the figure sat at 2.9 million BTC.
Data from CryptoQuant also revealed that miners are choosing to hold on to their current BTC supply. This suggests that miners expect higher prices and is a good indication of positive sentiment as miners constitute a significant portion of the Bitcoin selling pressure, they hold some influence over the Bitcoin price.
The Bitcoin hash rate has also been increasing, another bullish sign as more people see the BTC price as being reliable above their price of production, a factor that gives the hash rate and price a strong correlation.
While the number of BTC held by exchanges is at a 2020 low, data from CryptoQuant also shows that this figure may change soon as Bitcoin inflows to exchanges are on the rise.
According to Ki Young Ju increasing amounts of BTC being sent to exchanges is typically a bearish sign.
“BTC Inflows (netflows) into spot exchanges could indicate a potential sell pressure, stablecoin inflows indicate a potential buy pressure.”
While increased exchange inflows for Bitcoin are typically bad news, USDT transfers are also on the rise, according to data from Glassnode, having reached their 2020 high on Aug. 17.
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