Bitcoin Forum

According to @glassnodealerts^*:

Bitcoin balance^* on Exchanges just reached a 13-month low of 2,619,460.838 BTC 📉
Previous 13-month low of 2,630,423.224 BTC was observed on 30 June 2020.


View metric: https://studio.glassnode.com/metrics?a=BTC&m=distribution.BalanceExchanges

Does any of you have any explanation for that? Note that such measures may not be accurate due to the difficulty of knowing precisely the platform reserves, but they may give an indication of the nature of the future market movement.

*: The total amount of coins held on exchange addresses
*: Monitoring interesting movements of on-chain metrics

Looks like proof of keys at the start of january was a null event then... (tiny spike down I think).

I guess people want to hold more of their funds off exchanges but I don't really know what advancements have happened. Maybe the price is stable enough that people don't need trades that have stop losses or that they found something new to do with their funds (maybe defi)?

Either that or a company like binance could have just moved funds elsewhere (it's probably quite possible). 2.5M is a lot of btc to be stored on exchanges though, it's good to see it's going down.

Maybe it shows people are willing to HODL for at least another year in preparation for the supposedly inevitable bull run. You know, not your keys, not your bitcoin. It makes no sense to keep any of your coins on an exchange if you’re not actively planning to trade short to medium term.  

I don't have an explanation for the underlying causes (it's impossible to ever truly know why anything happens in markets) but I can tell you why it's important: it's a direct indicator of supply and demand. Weakening supply (assuming demand remains equal or increases) leads to higher prices. Conversely, increasing supply has the opposite effect.

You'll notice if you look at that chart that exchange supply was also very low in Q2 2019. That was during the rally to the $13,000s. Notice how supply strongly spiked upwards in late June and early July. That spike in supply also marked the top. Similarly, you can see how exchange supply peaked out in February this year. Those high supply levels marked the yearly top before the crash in March.

Following this same rationale, I would interpret the currently low exchange supply levels as a bullish indicator.

Maybe people are getting smart and pulling coins from exchanges?  How can you trust a companies in times like this? We could have huge depression in upcoming year. A lot of companies and also exchanges will sink.

I'll take a guess: big corporate / institutional investors.
Most probably those will take all the precautions for the coins bought (cold wallet, multisig, and so on) and that means moving the funds out of exchanges.
(Of course, this is just a guess and I may easily be wrong.)

One thing is for sure. If Bitcoin holders are afraid that BTC will crash again back to $6,000, $3,000 or even print a price chart that indicates it has more room to downtrend, you will definitely see more BTC in exchanges.

But that is not the case.

I believe, just like I am, Bitcoin has enough crashing: a long bear market with three major crashes. The last one was a support tester with that panic selling that briefly brought the price to $3,000-level. Plus of course, the halving. It does not compute if there is any future to cryptocurrencies, the price will crash to below mining profits again.

TLDR; It's bullish.

Anyway, I'm speculating we will see more btc in exchanges once the price reaches ATH at $20,000.  :o

I had absolutely no idea the number was that high, even though that's a record low.

I would guess that boredom is one of the main drivers. There's been no action of note for weeks now. People slowly drift away.

A more telling stat would be how much fiat is parked and waiting. Impossible to know of course.

Right, with the boring scenario or somewhat the price stabilising around the $9k range, traders will likely have put their bitcoin in their wallet to hold just to be in the safe. If I'm not mistaken, we are entering like more than a month with this trend and we still have the Covid-19 lingering around. Fiat park and waiting stats are difficult to track, I speculate that there could be millions waiting to pour again.

More likely if we see bitcoin price touches five digits again, more will FOMO and we all know that it could be one of the main drivers for speculators to get in again. We seen crashes this year already due to the pandemic so I doubt we will go on that levels again.

Let's see if this is a bullish indicator, or at least at indicator that worth to be taken seriously.  Investors and Traders keeping their bitcoin in a wallet that they have total control and when bitcoin goes on a massive bull run, just sit back and watch their investments grow.

This is scarcity hitting the exchanges. This could mean a few things. Most of all, it may mean Bitcoin owners are now more on hodling their BTC. This, in turn, could mean they have actually a bullish outlook of BTC in the coming months or years. Or probably as others are saying this season is not good for trading as there are no big movements and they are temporarily pulling out their BTC from exchanges.

Maybe we can glean some info from stablecoin data.

There is now ~ $12 billion in issued stablecoins. https://coinmetrics.io/charts/#assets=dai,busd,pax,sai,gusd,husd,usdc,tusd,usdt,usdteth,usdttrx_log=false_left=SplyCur_zoom=1546046417487.4375,1595135520000_stack=true

In April, there was ~ $9 billion, and $3 billion of that was held on exchanges. https://twitter.com/twobitidiot/status/1250979847536590849

He's got a point:

since not all exchange addresses are known and blockchain analysis is never accurate, that chart is also not accurate. but it makes sense since whenever price is stable the trading volume drops (obviously because day traders don't make as much profit so they have to trade less due to less volatility) and as a result there are less traders on exchanges hence less bitcoin in exchange wallets.

but here is another problem that brings me back to my initial statement, the trading volume on exchanges is not on its all time low for their balance to be on its all time low in the past year. granted exchanges report fake volume but it still should be higher.

If the market is not showing significant moves, I think people will still hold their bitcoin at their wallet, and they will not deposit their bitcoin to the exchanges. They still hold bitcoin until the price can start a rally to the higher price, and I guess that if the price can touch $15k, there will be a big moving from the bitcoin holder. Perhaps, if that happens, we will see the market will increase so high than just $15k.

They prefer to hold their bitcoin than to sell at a price now because they want to make a big profit when the price increases more than $20k. So many investors still waiting for the right time to deposit their bitcoin and sell to a higher price.

Investors (whales) are wise people. Why would they let show their caliber on other's public view. Also is it too dangerous to let your coin stay on an exchange just to hold it there. Checking the market, it seems BTC still have a positive outlookbut not enough for some investors so instead of taking some action, they disregard the market for now and probably learn to do the holding.

Also like other's said above. We are not sure if those figures were accurately recorded.

The price of bitcoin become stagnant in price range of 10,000 to 9,000 for over a month and I believe crypto traders that usually day trading are moving funds in safe place until there is some sign that some major price action will happened. Many traders are waiting for "doji" before they enter. Sadly the chart of BTC is not showing that much sign.

I'm not sure if the metrics are showing all bitcoin that withdraw on exchange or just comparing the before and after of the total BTC in the exchange. Because the reason might be traders are converting in to altcoins that's why the total BTC on users wallet in exchange decrease.

Maybe not all-time lows, but volume is pretty damn low, from looking at "real" volume exchanges like Coinbase Pro, Bitstamp, and Bitfinex.

I give more weight to exchange wallet holdings. Not only is the data more likely to be real than reported volumes, but they are a much more direct representation of BTC supply.

Wallet holdings indicate latent supply: coins that are waiting to be sold, whether they are on the order books or on the sidelines. Low holdings = weak supply. Low trading volume is not as straight forward. Low volume can indicate weak supply and weak demand, or it can just indicate a calm before the storm.

Exchanges will have a small number of inveterate and very active traders who make up the majority of volume. Everyone else is an occasional dabbler. It's the dabblers who have left and taken their coins with them and there will be many more of them but they'll be much more passive.

The hard core will never leave.

Well, I assume that people are moving their money out? I mean the price hasn't really changed all that much but people do not like USDT as much as they used to neither, so there is a possibility that people who would want to move their money outside of exchange and wait for bitcoin to make a move again might have increased a lot. Plus exchanges used to be quite trustworthy but right now looking at it, we can say that there are less trust in exchange world as well so people might be moving their money to their wallets too.

These are all assumptions of course, we have to ask each and every single person who withdrew their money from exchanges and ask them why they did that to have a real answer and we can't do that, which is why I think it is alright to just make assumptions in this case.

Pretty much the holding behaviour if we believe that traders are keeping bitcoin where they won't be able to trade them but on the other hand, don't traders anyway just keep their btc on exchanges at stop limit orders? I certainly would, unless we're expecting them to see strong moves to ATH again or is this just a way to keep supply low and orderbooks thin?

Not so sure about that, proof of keys isn't about January 2nd, it's about raising awareness about holding your own private keys instead of holding Bitcoin on exchanges.
Since the start of the year, BTC held on exchanges has dropped significantly. Maybe this is part of the ripple effect of this movement?

That seems like a stretch. :P

The peak in exchange holdings coincided with the peak in price. Seems like a clear case of heavy supply coming in. Then strong hands accumulated, during and after the crash. They've been withdrawing their coins.

2 650k BTC - 2 900k BTC this is only 10% range (or 1.4% of bitcoin supply). Its not that much of fluctuation to draw far-reaching conclusions.

2 900k BTC out of 18 430K BTC = 15,74%

2 650k BTC out of 18 430K BTC = 14,37%

Not a big change.

But if I had to estimate what is a reason i would go with:

1- bitcoin is boring, stable at 9000 for 2,5 months, whoever wanted to buy/sell at these levels already did that. And we can observe that by declining volume.
2- Futures and options are getting more and more popular.


And that's all. All other aspects are negligible in my opinion.

Edit:

https://i.imgur.com/zwKsG7B.png
https://studio.glassnode.com/metrics?a=BTC&m=distribution.BalanceExchangesAll

Zomming out - this is only a small correction