Bitcoin Forum

Despite an uneventful month for Bitcoin (BTC) price, on-chain metrics suggest that Bitcoin may be gearing for an imminent bull run. Noticeably, the number of Bitcoin held on spot exchanges has been decreasing since the start of the year, according to data from on-chain analytics firms, CryptoQuant, and glassnode. 

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There whole speculation is based of crypto exchanges having less crypto being held in their system and assuming that people who have withdrawn cryptocurrencies are holding it in their cold storages. I'm not against their assumption but for me in order for this to be true they must at least track the transactions and see if it stayed in that address and it didn't move around after because if it did it will only show that people are not hodling cryptocurrencies but instead using it on other purposes. I don't even think that most traders using exchanges right now are using this kind of way to hold cryptocurrencies as generally from what I know they still buy and hodl their cryptocurrencies directly in the exchanges to avoid fees.

Yeah, so it is still inconclusive, because we really don't know what happens to those withdrawn crypto. Maybe the owner move it around and re-invest on altcoins, cash it out or just HODL. Again, this kind of data set doesn't mean anything for now because it can't be track. So this metric could be one of those that it just being used to fit our bullish narrative, which is bad in my opinion.

This is important because you can keep most of it on cold storage in case the exchanges get hacked.

That's why I don't readily believe on something I see in the internet because people who are writing articles are also speculating most of the time, for newbies they sound that what they are saying is a sure thing and is really happening but on the article that has been provided you will see that they have not done any kind of research to support their claim that the users are in fact hodling it in their cold storages, it's like they are guessing something without any kind of accuracy whatsoever.

Excluding the new players. The flow of money going back to bitcoin once all of the investors in the Defi products comes back again with their profits from that side and pushing and letting it flow again to the bitcoin market. As usual, a bullish turn is imminent and inevitable. We used to say this from each time whenever we see a start to increase for bitcoin's price and as well as some drops. Because it's the normal characteristic of bitcoin being an asset that's highly volatile.

I don't see this as a reason for coming bullish trend, people are more skeptical about the security of their crypto assets so they are moving to wallets for holding purpose over the exchange which made the size of exchanges volumes getting reduced while the trading volumes are getting increased day by day.

logically it makes no sense to create this type of connection between lower number of coins on exchanges and price rise. if anything the exact opposite should be happening meaning price rise causes more coins to be on exchanges.

Less liquidity could also point to inaccuracy in pricing possibly we dont know exactly, I'm not sure it has to favor demand over taking supply.   If there are a large number of buyers holding BTC not just buying, i guess retention off exchange does fit that.

I'm looking at the scenario we repeat last summer also, top out and then revise prices there after which is still a reasonable outcome.

That's the idea, that lower prices encourage accumulation (including buying to withdraw from exchanges), which eventually causes the price to rise. Then higher prices eventually encourages profit taking, causing people to deposit more coins to exchanges. This is the general idea behind the Wyckoff market cycle.

Trying to use this metric for short term analysis ("imminent bull run" says the OP) is pretty futile. Balances may be trending downwards since February, but that doesn't mean price must trend upwards this week or this month.

These are very broad cycles we're talking about.

Investors know where to put their money and if its on exchange, I’m sure its a trusted exchange.

~ there are also reports that the bitcoin addresses now are growing and hit a all time high as well, indication that probably bitcoin enthusiast would rather put their stash on a wallet they have control instead of exchanges that is open for hacks.

And this metric could be good for short term speculation, but then again, there are so many important factors and I think this metric could not be considered as let's say the best parameter to predict short term price.

Investors know where to put their money and if its on exchange, I’m sure its a trusted exchange. Hodlers are waiting for a new bull moment and yes despite of the dump in the past weeks, we still have the chance to go up the way we predicted bitcoin. Reduced trading volumes might be because of the cheaper bitcoin and they don’t want to sell it on that price.

Yes, there was a slight decrease in the amount of bitcoin held on exchanges during the last bull run, but the price had been steadily climbing before that happened, and continued to steadily climb after the number of bitcoin on exchanges started increasing again. The number of bitcoin on exchanges also decreased during the bear market at the start of 2019, and again during the bear market at the start of this year. It's a big stretch to infer that fewer bitcoin on exchanges is directly related to the price, let alone price increases.

the problem with metrics like these are that they are affected by a lot of things and the price itself is being affected by lots of different metrics. figuring out how much of that certain metric change was due to adoption and contributes to price rise is nearly impossible.

BitMEX has witnessed an outflow of at least 40,000 BTC (worth around $424 million at press time) since the charges were announced on Oct. 1. Many of these coins have migrated to addresses belonging to major exchanges like Kraken, Binance and Gemini, and a good number of these addresses have been newly generated, according to Alex Melikhov, CEO and founder of Equilibrium and the EOSDT stablecoin. "That has been a viable reason for the spike in new entities," Melikhov told CoinDesk in a Telegram chat.

However, on-chain analyst Cole Garner disagrees, saying the spike in new entities probably represents an entry of new investors into the market and has little to do with the BitMEX issue. That's because the metric has continued to rise over the past five days even though BitMEX withdrawals cooled following an initial spike from Oct. 1–2.

A third theory making the rounds is that Chinese media's recent and unusual reports calling cryptocurrency the year's best-performing asset maybe have caused local investors to put some cash into the bitcoin market.