• Bitcoin exchange balances have fallen to a three-year low despite rising prices

  • Since the start of the bull run, Bitcoin exchange balances have been declining. Volumes were expected to increase after the digital asset reached a new all-time high in October. This, however, was not the case. Previous trends have frequently pointed to an increase in exchange balances during bull markets as investors moved their holdings to exchanges in order to profit. This bull market has defied all expectations and is still going strong.

    As investors withdraw BTC from exchanges in large numbers, outflows from exchanges outnumber inflows. Exchange balance volumes in relation to bitcoin’s circulating supply have fallen to three-year lows. Bitcoin exchange balances have now reached levels not seen since January 2018. This has resulted in a supply squeeze on exchanges, causing sell pressures to plummet dramatically.

    Balances are falling as a result of large exchanges.

    Large amounts of bitcoin have been withdrawn from major exchanges such as Binance, Coinbase, and Huobi. Binance had the highest outflows in the previous week, with 21,000 BTC withdrawn from the cryptocurrency exchange. This is one of the market’s most precipitous drops.

    Thousands of BTC have also left Huobi in the last week. 8,000 BTC have been withdrawn from the cryptocurrency exchange in the last seven days. The exchange’s outflows resulted in a 9% drop in the volume of bitcoin held on Huobi.

    These outflows are no longer surprising given that the market has been following this trend for several months. Scarcity has increased buy pressures as investors scramble to get their hands on as much of the digital asset as possible.

    Exchanges control 12.94 percent of the Bitcoin supply.

    In October, exchanges’ share of total circulating supply fell dramatically. Exchanges currently have 2.44 million BTC on their balances. This equates to 12.94% of total circulating supply, a new three-year low. In the last week alone, 27,500 BTC have been removed from exchanges.

    The volume held by these exchanges has consistently declined as the price of bitcoin has risen, according to chart trends. Exchange balances had peaked for the year in June, following a market crash that ended the bull rally in April. Sell pressures eased in the months following June, allowing investors to accumulate more. Investors are preferring to keep their assets in cold storage rather than moving them to exchanges to take advantage of market gains.

    According to Glassnode data, Coinbase holds 29 percent of global exchange reserves. Despite a sharp decline in its balances, Binance still accounts for 21% of global bitcoin exchange reserves. Gemini has the third-largest volume, accounting for 12% of global reserves. However, the report did not include balances from the cryptocurrency exchange, FTX.

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