Despite Struggling Price, Bitcoin Exchange Reserve Hits Lowest Value Since September 2018


Despite the recent struggling Bitcoin price, on-chain data shows that the exchange rate reserve has just hit its lowest level since September 2018.

Bitcoin Exchange Reserve Drops to Lows Since September 2018

As noted by an analyst in a CryptoQuant afterthe BTC exchange reserve has fallen further recently, reaching its lowest value in more than 3.5 years.

The “reserve for all exchanges” is an indicator that measures the total amount of Bitcoin present on wallets of all exchanges.

When the value of this indicator rises, it means that the supply on exchanges increases as investors deposit their coins. Such a trend is usually bearish for the price of the crypto as holders usually switch to exchanges for selling purposes.

On the other hand, a declining value of the reserve would mean that investors have recently withdrawn a net amount of Bitcoin. This trend may turn out to be bullish for the currency as it could be an indication of accumulation behavior.

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Here is a chart showing the trend in the price of BTC over the past four years:

The value of the indicator seems to have decreased in recent years | Source: CryptoQuant

As you can see in the chart above, the Bitcoin exchange reserve has been in a downward trend for the past two years.

The metric saw a temporary upward trajectory in May 2021, but after a few months of sideways movement, the reserve resumed its decline. Now the indicator has reached its lowest level since September 2018.

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The exchange reserve is often regarded as the crypto’s “sale offer”. With its value dropping for such a long time now, some analysts believe it could cause a supply shock in the Bitcoin market.

Due to the dynamics of supply and demand, such a supply shock would be quite bullish for the price of the crypto in the long run.

Others, however, believe that falling reserves are simply due to the redistribution of market structure, and that stock markets are not the only major source of selling pressure these days.

Nevertheless, the reserve that is still falling despite the recent struggling Bitcoin price amid uncertainty stemming from the Russia-Ukraine war may be a positive sign of conviction among holders.

BTC price

At the time of writing, Bitcoin price is hovering around $38.3k, up 1% over the past week. Over the past month, the crypto has gained 3% in value.

The chart below shows the trend in the price of BTC over the past five days.

It seems Bitcoin has moved sideways in recent days | Source: BTCUSD on TradingView
Featured image from Unsplash.com, Charts from TradingView.com, CryptoQuant.com

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