On-chain data shows that bitcoin and ethereum exchange supplies have been going in opposite directions recently, a sign that a rotation may be underway.
bitcoin exchange supply has decreased while ethereum has increased
According to data from the on-chain analysis firm x.com/santimentfeed/status/1801059540416278740″ target=”_blank” rel=”noopener nofollow”>HolyThe Supply on Exchanges metric has recently fallen to the lowest level since December 2021 for bitcoin.
“Exchange Supply” tracks the total supply amount of a cryptocurrency in wallets associated with all centralized exchanges.
When the value of this metric increases, it means that investors are making deposits of the asset on these platforms at the moment. Holders transfer their tokens to exchanges whenever they want to use one of the services they provide, which may include trading.
On the other hand, a drop in the indicator suggests that investors are currently withdrawing coins from exchanges and potentially holding them for extended periods.
Now, here is a graph that shows the trend in the supply on the Exchanges of the three main currencies in the sector by market capitalization: bitcoin (btc), ethereum (eth) and Tether (USDT).
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The value of the metric appears to have been moving oppositely for btc than the other two | Source: x.com/santimentfeed/status/1801059540416278740/photo/1" target="_blank" rel="noopener nofollow">Santiment on x
As shown in the chart above, the supply of bitcoin exchanges has decreased dramatically in recent months. The metric's value now stands at 942,170 btc, the lowest the cryptocurrency has seen since December 2021.
At the same time as these btc withdrawals occurred, ethereum and Tether saw net deposits. As mentioned, deposits may mean that investors want to sell the asset.
As such, given the opposite trend occurring in bitcoin, it seems possible that investors have been rotating eth and USDT inflows towards the original cryptocurrency.
Following these deposits, the supply on the exchanges reached 17.98 million eth for ethereum and 16.04 billion USDT for Tether. Naturally, this capital rotation, if indeed underway, would be a bearish sign for eth as it shows that investors consider the asset too risky at the moment.
USDT, being a stablecoin with its value pegged to the US dollar, would not be affected by these currency inflows. Instead, USDT currency inflows are generally positive for the market as a whole, as they suggest that some investors who had tied up their capital in this stable asset are willing to deploy it elsewhere.
Despite this bullish development that bitcoin has seen recently in terms of its exchange supply, its price has only been consolidating sideways in recent months.
btc Price
At the time of writing, bitcoin is trading around $67,900, down almost 5% over the last seven days.
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Looks like the price of the asset has been moving sideways recently | Source: BTCUSD on TradingView
Dall-E Featured Image, Santiment.net, TradingView.com Chart
