According to the data, the Bitcoin balance of the exchange is declining drastically and has fallen to a level not seen in two years. Arcane Research detailed that the chart shows a sharp decline in the number of bitcoins leaving the exchange and has become “one of the main stories of the year.” At the same time, on-chain indicators indicate that as the value of Bitcoin increases, many older coins are being sold.
Since February, Bitcoin holdings on exchanges have fallen by 21%
In 2020, there are many cryptocurrencies on exchanges, but the total number of Bitcoins (BTC) held on trading platforms has dropped significantly this year. In fact, according to the on-chain statistics of Glassnode, since 2018, the BTC on the exchange has not been as low as it is today.
From January 2018 to February 2020, the total amount of BTC held on exchanges increased. However, since February, Bitcoin holdings on exchanges have fallen by 21.66% and remain at the lowest level in two years.
On Tuesday, Arcane Research tweeted about BTC leaving the exchange and shared a chart showing the data captured by Glassnode. “One of the main stories of this year is the sharp decline in the total balance of BTC exchange,” Arcane Tweet. The researcher added: “After a sideways movement throughout November, the BTC transaction balance started to decline again.”
The data suggests that after the recent Okex Kucoin hack and withdrawal issues, cryptocurrency owners may be skeptical of crypto exchanges. Although some suggest that new buyers become long-term holders, and believe that the self-hosting trend will continue to drive demand.
“Youtuber Cryptocurrency Daily” said: “The balance of Bitcoin exchanges is falling at an unprecedented rate.” Tweet Back in October. “This means fewer and fewer people are hoping for short-term speculation-bullish.” Although the level in November remained stagnant, BTC fell due to exchanges in the first week of December.
Researchers say it is bullish for long-term holders to realize profits at this stage
In addition to the recent decline in BTC holdings in foreign exchange reserves, on-chain research also shows that as prices rise, older coins are being sold. “Although this seems shocking,” Glassnode’s Liesl Eichholz explained. “Historically, this trend is extremely optimistic.”
Eichholz further elaborated that the researchers used the physical adjusted ASOL (Average Expended Output Life) of the network Bitcoin. This data allows you to view the old coins spent as the price of BTC rises, and statistics show that long-term holders have realized profits.
According to the Glassnode contributor, although one might think, the long-term holders (LTH) achieving profitability at this stage of the game is not a bearish signal.
Eichholz wrote: “Due to this trend, the total supply held by long-term holders usually declines before the market reaches its peak-therefore, the total supply of LTH will also decrease as a result,” “see above. The substantial reduction in the total supply of LTH is intuitive; as these long-term holders realize profits, they leave room for new retail investors to enter the market, which has been the driving force behind the biggest bull market in Bitcoin.”
In short, it seems that many people have cancelled BTC on the exchange. Some of them are indeed new long-term holders, but how many are uncertain. In addition to these data, Glassnode’s report on existing LTH participants also shows that many people “habitually accumulate BTC in a bear market and then realize profits on the way up, but the important thing is before the peak.”
“If the price of BTC follows this historical trend, it indicates that we are expected to increase prices even further before reaching the highest price,” Eichholz concluded.
What do you think of the number of bitcoins leaving the exchange in 2020 and long-term holders realizing profits to accumulate more bitcoins? Let us know your thoughts on this topic in the comments section below.
Picture Credits: Shutterstock, Pixabay, Wiki Commons, Arcane Research, Glassnode,
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