Retail investors in the cryptocurrency space are showing signs of becoming long-term believers, with a recent exodus of bitcoin (btc) and ethereum (eth) from centralized exchanges. Latest data shows that user balances for the two major cryptocurrencies have increased btc&m=distribution.BalanceExchanges&s=1570361904&source=content_type%3Areact%7Cfirst_level_url%3Aarticle%7Csection%3Amain_content%7Cbutton%3Abody_link&u=1587222400&zoom=” target=”_blank” rel=”noopener nofollow”>sunk to four-year lowand analysts interpret the movement as a bullish signal for the future.
While investors expected higher prices in a bull market, bitcoin (btc) user balances and ethereum” target=”_blank” rel=”noopener nofollow”>ethereum (eth) on centralized exchanges fell significantly, according to data from Glassnode.
The value of bitcoin” rel=”nofollow noopener” target=”_blank”>bitcoin fell to less than 2.3 million coins, or about $158 billion, while ethereum's value fell to less than 16 million coins, or less than $58 billion.
'Diamond hands' and dollar cost averaging
The decline in foreign exchange balances, which began before the July 2020 bull run, has continued unabated. This suggests a change in investor mindset, as users choose to hold their coins for the long term rather than actively trade them.
Source: btc&m=distribution.BalanceExchanges&s=1570361904&source=content_type%3Areact%7Cfirst_level_url%3Aarticle%7Csection%3Amain_content%7Cbutton%3Abody_link&u=1587222400&zoom=" target="_blank" rel="noopener nofollow">Glassnode
This new confidence could be attributed to several factors. The economic turmoil caused by recent market disruptions, coupled with rising inflation and other financial calamities, has made alternative assets like bitcoin, with its limited supply, increasingly attractive as a hedge.
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Some analysts have noted a new type of cryptocurrency investor. Instead of looking for quick profits, these investors now hold on to their coins during the market's ups and downs, adopting a crypto-glossary/diamond-hands/” rel=”nofollow noopener” target=”_blank”>“diamond hands” getting closer. Many are also using dollar-cost averaging, constantly buying more to build their positions over time.
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Total crypto market cap at $2.3 trillion on the daily chart: TradingView.com
Wall Street Whales Dive, DeFi Heats Up ethereum Engine
The positive vibe extends beyond retail investors. Institutional giants like BlackRock and Fidelity have been increasing demand for bitcoin by introducing spot bitcoin ETFs. Established corporations like MicroStrategy have also made significant investments in the leading cryptocurrency.
For ethereum (eth), the world's second-largest cryptocurrency and the king of altcoins, the bullish narrative is driven by a different set of factors. ethereum's dominance in the decentralized finance (DeFi) space, where it supports a $68 billion ecosystem, positions it as a major player in the future of finance.
bitcoin and ethereum price action and market cap. Source: Coingecko
Long-term value proposition
With more than 25% of ethereum's supply currently up for grabs, it's clear that investors see long-term value in the platform, market watchers noted. The combination of a thriving DeFi ecosystem, the option of staking, and the upcoming full shift to proof-of-stake paints a very optimistic picture for the future of ethereum.
The recent drop in exchange balances means growing confidence in the long-term potential of these digital assets, and investors are choosing to take their cryptocurrencies off the floor and freeze them.
Featured image from The Science of Birds, TradingView chart
