Bitcoin (BTC) foreign exchange reserves are continuously falling as analysts spot the trend towards a shortage of sellers. Since the March crash, trade reserves have rapidly dropped from 2,950,000 BTC to 2,700,000 BTC.
In just seven months, a 250,000 BTC drop in foreign exchange reserves means a $ 2.85 billion drop. Behind the steep trend there could be two main factors: a drop in sellers and lower confidence in exchanges.
Reserves of bitcoin on exchanges. Source: Glassnode
Is the number of Bitcoin sellers decreasing during an accumulation phase?
Analysts mainly attribute the sustained decline in Bitcoin exchange reserves to an overall shortage of sellers in the market.
As retailers refrain from selling BTC at current prices, institutions are also acquiring more BTC. Simultaneous decline in selling pressure and an increase in buyer demand is an optimistic trend for Bitcoin.
A pseudonymous trader known as “Oddgems”
“More and more #Bitcoins are coming out of exchanges and most likely being transferred to unsecured wallets. This suggests slightly lower liquidity and less selling pressure going forward. “
Michael van de Poppe, a full-time trader on the Amsterdam Stock Exchange, echoed the position.
He pointed out that BTC outflows from exchanges are growing as liquidity reserves from institutions are flowing into Bitcoin. He noticed:
“To be fair, more and more $ BTC is shifting from trading to cold wallet storage. Large publicly traded companies allocating cash reserves to $ BTC. It’s incredibly bullish.”
The confluence of stagnant retail streams from Bitcoin and steady demand from institutions reinforce the overall sentiment around BTC.
Dan Tapiero, the co-founder of 10T Holdings, similarly claimed that “Bitcoin shortages” are possible due to growing institutional interest.
Other bid metrics indicate increased HODLer activity
According to Glassnode, much of Bitcoin’s supply is stored in “storage addresses”. These addresses represent users who have never moved BTC from their wallets, who are likely to hold BTC for the long term.
When “HODLing” activity is high, which refers to holding BTC for prolonged periods, it typically indicates the start of an accumulation phase. Glassnode She said:
“The accumulation of Bitcoin has been steadily increasing for months. $ 2.6M BTC (14% of the supply) is currently held in accumulation addresses. Accumulation addresses are defined as addresses that have at least 2 incoming txes and have never spent BTC. “
Positive fundamental metrics on the chain complement Bitcoin’s favorable technical structure. Despite various events that could have put selling pressure on BTC, including the BitMEX probe and the suspension of OKEx’s withdrawal, BTC remains above $ 11,400.
The controversy over BitMEX and OKEx has also led to foreign exchange reserves dropping dramatically, perhaps frightening traders. Although BitMEX quickly withdrawals processed and OKEx portfolios show no outflows, regulatory uncertainty was enough to slide foreign exchange reserves.
The supply of BitMEX BTC. Source: CoinMetrics
In early October, technical analysts identified the $ 11,100 to $ 11,300 range as a critical short-term resistance range. BTC has remained relatively stable above that range, which is technically a positive sign for renewed momentum.