04.03.2024

The number of bitcoins on exchanges began to decline again

According to the analytical platform Glassnode, the total number of bitcoins on exchanges began to fall again, and in general, the indicator has gradually decreased since the beginning of 2021.

Data on how much BTC is stored on trading floors can tell a lot about the current state of the market, as well as give an idea of ​​the main mood of its players. It is believed that if a cryptocurrency quickly leaves the exchanges, investors want to preserve their assets for the long term – in other words, they withdraw and store them in cold wallets for a long time.

This opinion about the reasons for the withdrawal of coins from exchanges is quite popular – and it is easy to explain. The fact is that the coins that the user sends to the cryptocurrency exchange, in fact, cease to belong to him. Of course, the owner will most likely withdraw the crypt at the right time without any problems, however, there are exceptions here too.

For example, on February 19 and 22, the Binance exchange suspended the withdrawal of ETH and ERC20 tokens from its platform, and this lasted quite a long time. Then the representatives of the exchange explained the situation with the excessive congestion of the Ethereum network, although nothing like this was observed in the blockchain.

And although in the end the conclusions were resumed, the situation turned out to be unpleasant. It was during these periods of time that the holders of the cryptocurrency clearly realized that they could not influence the work of the exchange and in which case they could lose access to their coins.

The way out of the situation is to store coins on hardware wallets that do not depend on anyone. Since it is the user who holds the so-called seed phrase or a unique combination of words to work with a separate blockchain address, no one can prohibit him from conducting transactions with his assets.

Therefore, if the user plans to keep coins for a long time, it is safer to do so on such a device.

What’s happening in the Bitcoin market

From February 23 to March 2, the number of bitcoins on exchanges fell by 2 percent. This corresponds to a withdrawal of approximately 52,900 BTC at $ 2.7 billion at current exchange rates . The downward trend in the volume of digital assets on trading floors has been observed for several months.

There are currently 2.3 million BTC remaining on the exchanges . This is the lowest since July 2018, when Bitcoin was worth around $ 7,400, Decrypt reports.

Bitcoin exchanges trading

Decrease in the amount of BTC on exchanges amid rising cryptocurrency prices

In general, this trend is local, since from August 2014 to March 2020, the number of coins on exchanges only grew. That is, we can conclude that over the past year, Bitcoin has attracted the attention of investors so much that a real «chase» has literally begun for the accumulation of coins.

In addition, this trend is strengthened by the activity of large companies that buy bitcoins, ethers and other cryptocurrencies for millions of dollars. For example, Tesla bought BTC for $ 1.5 billion in January 2021. Well, MicroStrategy has more than 90 thousand bitcoins at its disposal. Naturally, all this is not stored on conventional cryptocurrency exchanges, but sent to more reliable wallets controlled by companies.

At the same time, much of the mainstream cryptocurrency’s circulating supply hasn’t moved in years. According to the HODL Wave indicator developed by analysts on the Unfolded platform, 3.3 million bitcoins have not moved in over seven years. This amount represents 17.87 percent of the circulating cryptocurrency supply and is worth a staggering $ 160 billion at current exchange rates.

It is worth noting that this figure includes long-term cryptocurrency holders, «whales», the first Bitcoin miners and just lost coins. No one will have access to the latter, so they can be considered permanently out of circulation.

Analysts have noted another interesting trend. It turns out that the total number of coins held by long-term BTC holders decreased in 2021. It turns out that they took advantage of the rise in the Bitcoin rate above 50 thousand dollars and fixed a part of the profit. This is usually followed by a correction – that is, a subsidence of the niche. And large players use it just to replenish their own cryptocurrency reserves.

This trend is visible on the chart, where the orange line shows the bitcoin balance of holders who are counting on the long term.

bitcoin hodle chart

Long-term holders’ Bitcoin balance data

We believe that the situation with the mass withdrawal of cryptocurrency is normal for the stage of market growth, at the beginning of which it is now. However, investors are counting on the continuation of the run of blockchain assets in the future, and therefore, at the moment, they are ready to hold them on their personal wallets. Thus, they will provide additional security and will not worry about possible suspension of withdrawals of cryptocurrencies from exchanges. So there is nothing strange in what is happening – this is just another proof that the niche still has fuel for further development.

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