Bitcoin exchange reserves hit multi-week low, indicating increased long-term holder sentiment
Bitcoin BTC -1.11% exchange reserves have fallen to a multi-week low, indicating an increase in investors removing their coins as part of a long-term holding strategy.
According to CryptoQuant data, the average amount of bitcoin on major centralized exchanges has remained at around 2.04 million coins for most of December. However, in the past 24 hours, there has been an outflow of over 33,000 bitcoins, resulting in exchange reserves hitting a multi-week low of just over 2 million bitcoin. Coinbase alone saw an outflow of over 19,000 bitcoins in the past 24 hours, according to CryptoQuant data.
The outflow of bitcoin from exchanges to cold storage has been a year-long trend, possibly driven by the rise in the digital asset’s price and increasing anticipation about the potential approval of spot bitcoin ETFs. In January 2023, bitcoin exchange reserves hovered around the 2.2 million mark, indicating a decrease of approximately 200,000 coins since the start of the year, according to CryptoQuant.
Possible weakening of supply-side pressure
Fewer coins on exchanges weaken supply-side pressures and support the potential for price appreciation. One analyst interpreted the on-chain transfer of bitcoin, valued at over $1.4 billion, from exchanges to cold wallets in the past 24 hours as an indication of diminishing confidence in centralized monetary systems.
“Bitcoin is exiting exchanges as trust in the global markets and fiat money system collapses in the face of historic debt-to-GDP ratios crippling so-called advanced economies like the U.S.,” Volcano Energy Chairman and advisor to El Salvador President Nayib Bukele Max Keiser told The Block.
“Storing wealth in unconfiscatable, perfect money bitcoin is now understood by the world’s wealthy as their only chance to survive the new, greatest depression,” he added.
The reduction of bitcoin liquid supply comes as the world’s largest digital asset by market capitalization posted a 0.6% decline over the past 24 hours. Bitcoin was changing hands for $42,235 at 11:00 a.m. ET, according to The Block’s Prices Page.
