On-chain data shows that bitcoin has continued to leave exchange wallets recently, a sign that the asset's price could be bullish.
bitcoin Exchange Reserve Has Recorded a Significant Decline Recently
As analyst Ali Martinez explains in a newx.com/ali_charts/status/1846334238150296054″ target=”_blank” rel=”noopener nofollow”> mail On x, exchanges have seen a large amount of bitcoin come out in recent months. The on-chain relevance metric here is the “Exchange Reserve”, which tracks the total number of tokens currently held in the wallets of all centralized exchanges.
When the value of this metric increases, investors will make net deposits on these platforms right now. As one of the main reasons holders may transfer their coins to exchanges is for selling-related purposes, this trend may be bearish for the price of the asset.
On the other hand, the indicator recording a decline implies that users are transferring a net amount of btc from wallets associated with the exchanges. This could be a potential sign that investors want to hold onto their coins for the long term, which can naturally be bullish for the cryptocurrency.
Now, here is a chart showing the trend of the bitcoin Exchange Reserve over the past year:
<img decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/10/Bitcoin-Investors-Withdrawal-27-Billion-in-BTC-Over-Past-8.jpeg" alt="bitcoin Exchange Reserve ” width=”1200″ height=”675″/>
The value of the metric appears to have been going down over the last few months | Source: x.com/ali_charts/status/1846334238150296054/photo/1" target="_blank" rel="noopener nofollow">@ali_charts on x
As the chart above shows, the bitcoin Exchange Reserve has been experiencing a consistent downtrend since the beginning of the year, suggesting that investors have been continually depleting the supply on these platforms.
More specifically, the value of the indicator has decreased by 400,000 btc in the last eight months, which is equivalent to more than 27 billion dollars at the current cryptocurrency exchange rate.
The incessant withdrawals from these platforms can be a positive sign for the asset if investors have made them for accumulation purposes. However, there could be another reason behind this trend.
The chart shows that outflows from exchanges began around the time that spot exchange-traded funds (ETFs) gained approval from the U.S. Securities and Exchange Commission (SEC).
Spot ETFs provide an alternative means of exposure to bitcoin price movements in a way familiar to traditional investors. Traders who do not want to venture into cryptocurrency wallets and exchanges may prefer to invest in the asset through these financial instruments.
As such, the long-term decline that the Foreign Exchange Reserve has been experiencing could represent the market shift that has induced the emergence of spot ETFs.
btc Price
At the time of writing, bitcoin is trading at around $68,000, up more than 9% in the last seven days.
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Looks like the price of the coin has been rising recently | Source: BTCUSDT on TradingView
Dall-E Featured Image, CryptoQuant.com, TradingView.com Chart
