Bitcoin Bullish Signal: Exchange Reserves Hit New 4-Year Lows
09 Juin 2022 - 9:00PM
NEWSBTC
On-chain data shows Bitcoin exchange reserves have now reached new
4-year lows, a sign that could prove to be bullish for the crypto’s
price. Bitcoin Exchange Reserve Has Sunk Down Further Recently As
pointed out by an analyst in a CryptoQuant post, the BTC exchange
reserve has been going down, suggesting buying has been going in
the market. The “all exchanges reserve” is an indicator that
measures the total amount of Bitcoin currently stored in wallets of
all centralized exchanges. When the value of this metric goes up,
it means investors are depositing a net amount of coins to
exchanges right now. Such a trend, when prolonged, can be bearish
for the price of the crypto as holders usually transfer their
crypto to exchanges for selling purposes. Related Reading
| When Greed? Bitcoin Market Crushed Under One Full Month Of
Fear On the other hand, a downtrend in the reserve suggests
investors are withdrawing their BTC from exchanges at the moment.
This kind of trend can be bullish for the price of the crypto. Now,
here is a chart that shows the trend in the Bitcoin exchange
reserve over the last few years: The value of the metric seems to
have experienced downwards movement over the last year | Source:
CryptoQuant As you can see in the above graph, the Bitcoin exchange
reserve has observed some sharp movement down recently, taking its
value to new 4-year lows. This is a continuation of the overall
downtrend in the indicator that has been going on for almost a full
12 months now. Related Reading | U.S. Macro Pressure
Responsible For Entire Bitcoin Downtrend This may imply that the
market has been in a state of constant accumulation, which would
mean a supply shock could be deepening in the BTC market. Due to
supply-demand dynamics, such a shock can be constructive for the
price of the cryptocurrency in the long term. However, some data
from December 2021 suggests that the growth of new investment
instruments like ETFs are likely one of the reasons behind the
exchange reserve’s decline. The coins are simply moving from one
source of selling pressure into another. Such a shift would mean
that a supply shock wouldn’t take place just by declining exchange
reserves. Nonetheless, some of the decline should still be from
buying in the market so a decreasing reserve can still be bullish
for the value of Bitcoin. BTC Price At the time of writing,
Bitcoin’s price floats around $30.1k, up 1% in the past week. Over
the last month, the crypto has lost 12% in value. 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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