Bitcoin price fundamentals in ‘moon mode’ as BTC held on exchanges drops

[mamamu111]

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. 

READ THE COMPLETE ARTICLE HERE: https://worldpublicityblog.com/index.php/2020/10/09/bitcoin-price-fundamentals-in-rising-mode-as-btc-held-on-exchanges-drops/

[Febo]

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. 

READ THE COMPLETE ARTICLE HERE: https://worldpublicityblog.com/index.php/2020/10/09/bitcoin-price-fundamentals-in-rising-mode-as-btc-held-on-exchanges-drops/

I dont see why should number of Bitcoins on exchanges matter. People that will want to sell Bitcoin high will move it to exchange and sell when right price for them happens. They dont need to put it on exchange now and wait for that to happen.  Bitcoin is on a bull run from start of this year. It was cut off with covid situation in march and set on pause a bit back then. But Bitcoin bull is here and will be here for like a year. Bitcoin bull market is not just fro a month. Last bu market was not just in November 2017. Last bull market was from October 2015 to December 2017. Almost 2 years.

[o_e_l_e_o]

If you look at the tweet that the article references, it tells a somewhat different story: https://twitter.com/woonomic/status/1313798073995325440

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.

Secondly, the number of bitcoin currently on exchanges is more than double (more than triple if you look at the next tweet) than it was 2 years ago.

[Harlot]

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.

[Yaunfitda]

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.

[blockman]

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.

[Poker Player]

The fundamentals of bitcoin are going well, the problem is that the price, especially in the short term, often does not follow them. There were long periods uring the bear market when also the fundamentals were going well. If we were to start with lockdowns again now, I am sure that the price would go to hell.

As for BTC held on exchanges, I agree with the above that it is not essential for price prediction.

[adaseb]

One thing that most people need to keep in mind is this. One reason why the exchange holdings drop might be due to margin on most exchanges. Say you are using a spot exchange and you sell 1 BTC at $10000 and keep this to rebuy lower, you would need to keep 1 BTC on the exchange.

Now consider a margin exchange with 3x, instead of keeping 1 BTC you only need to keep around 0.333BTC to sell the same amount. With a futures exchanges you get even more leverage and can do 10x instead and keep 0.10 BTC instead of 1 BTC.

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

[Harlot]

~snip

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.

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.

[btc_angela]

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

Also it might be that traders are really afraid of hacks now and at least learn some lessons in the past, specially with the recent Kucoin hack. So it's really better to move out our funds from exchanges, hold on the wallet that we have total control. But this is good though, we might not see this as a bullish signal the the BTC held on exchanges are dropping, but the landscape is changing and developing and what we may have seen in 2017 will not be true for 2020 or beyond as the market is very dynamic.

[bitgolden]

~snip

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.

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.

That should be something you do for basically everything in life. Most good schools teach you how to learn and not the basic concepts, obviously you will learn mathematics or history or basically any subject but the main thing they teach you is how to learn, every person learns differently but when you know how to learn, you can go out there and learn anything because resources are available for any subject.

Same goes with being a bit syndical about everything that is said, if you take everything in face value and accept it that way, you are not going to be a smart person, you are not going to actually go with what is real, you will believe all the lies, but if you learn how to check everything and find the facts, you will be a lot smarter than almost 90% of humanity. Never just take someone else's words for anything, go check it yourself.

[STT]

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.

[Gozie51]

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 can also relate the shortage of bitcoin in exchange as Op said to either the DeFi hype that is pushing investors to withdrawal and engage their bitcoin to buy into the new found investment. Hopefully by the time the hype goes down, I guess the shortage won't make any difference. But , I don't really take it that bitcoin shortage in exchange matters or makes anything much difference, people still have their coins in their wallets.

[semobo]

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.

[gantez]

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.

The exchange doesn't make the hodling of people any different. You can decide to withdraw your bitcoin or trade it to another coin, that doesn't mean that people are closing up from investing in bitcoin. It is just something that can happen at anytime.

[pooya87]

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.
it is a very simple reason too, as price rises we can clearly see that the trading volume increases. even though not all of that volume is new deposits but it is reasonable to assume more traders move their coins to exchanges to trade more during rises (sell on peaks and buy back on corrections for example).

[beerlover]

If there is less money in the exchanges that means there is less money being sold, simple as that. You could still buy bitcoin because there is money in there in fiat form and people still want to buy, but the more bitcoin is taken out of exchanges the more bitcoin scarcity happens which makes the demand high but the supply very low.

It is simple mathematics that when people take their money out of the exchange market they tend to make the bitcoin price go up. This is evident in the recent increases as well, as soon as people started to remove their bitcoins from the exchanges, the price of bitcoin started to go up because let's be honest there was correlation between those two things, the more people withdrew the more the price increased recently after this news.

[exstasie]

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.

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.

[FanEagle]

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.

Less liquidity would mean that but not less volume or trading. Which means if there is less money in the deposits but there is more active that could still mean bitcoin is doing very well. Consider this, lets assume there is 500 million dollars worth of bitcoin in one exchange, but most of them are idle and only 100 million dollars of them are at the market, does that mean it has high liquidity or just have amount of bitcoins?

Consider less money on deposits, let's say there is 250 million dollars worth of bitcoin at that exchange, but over 200 million dollars of it is on the trade book, doesn't that make it a lot more liquid? This is something we have to look for, do we really know if the liquidity went down as well, or was it just the amount that was idle that went down?

[Jating]

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.

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.

Ok it makes sense now, was trying to understand the connection and if I'm not mistaken, 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.